The Financial Services Bill has reached the Report Stage in the House of Lords, marking another important milestone in the Government’s plans to modernise financial regulation. While the Bill covers a wide range of financial services, one of the most significant areas for lenders and brokers is the proposed reform of the UK’s consumer credit framework.
One of the Bill’s key proposals is to repeal many of the information and disclosure requirements currently set out in the Consumer Credit Act 1974 (CCA) and transfer responsibility for these rules to the Financial Conduct Authority (FCA). Rather than relying on legislation that can be slow to update, the FCA would have greater flexibility to create and amend consumer credit rules in response to changes in the market, technology and consumer behaviour. The Bill also gives the Treasury powers to repeal or replace additional provisions of the CCA through secondary legislation, allowing reforms to be introduced in a phased and targeted way. These changes are intended to reduce unnecessary regulatory complexity while ensuring that consumer protections remain effective and proportionate.
The Government believes this approach will create a regulatory framework that is better suited to today’s digital lending environment while maintaining strong consumer protections. By placing more responsibility with the FCA, the reforms aim to support innovation, improve regulatory agility and provide firms with clearer, more consistent requirements across the financial services sector.
During the Report Stage, members of the House of Lords considered several amendments, including proposals aimed at preventing the removal or weakening of existing consumer credit protections. Although these amendments were not agreed, the discussions highlighted Parliament’s continued focus on ensuring that consumers remain adequately protected throughout the reform process.
For firms operating within the consumer credit sector, these developments reinforce the importance of maintaining robust compliance arrangements. Although the legislation has not yet become law, firms should begin considering how a shift from detailed statutory rules to FCA-led regulation could affect their policies, procedures and customer communications.
An FCA-led framework is expected to provide greater flexibility, but it may also place increased emphasis on firms demonstrating good consumer outcomes rather than simply complying with prescriptive legal requirements. This aligns with the regulator’s broader focus on the Consumer Duty and evidence-based compliance.
It is important to remember that the Consumer Credit Act remains in force while the Bill continues its passage through Parliament. Firms should therefore continue to comply with all existing regulatory obligations until any legislative changes are formally introduced and transitional arrangements are confirmed.
As the Bill moves through its remaining parliamentary stages, further scrutiny and debate will help determine how the reforms support innovation, market confidence and the long-term competitiveness of the financial services sector.
