The UK government has recently announced its plans to reform the Consumer Credit Act, a legislation that has been in effect for nearly half a century and governs credit card purchases and personal loans. The main objective of this reform is to modernize the existing laws, in order to reduce costs for businesses and simplify the rules for consumers.
Currently, the Consumer Credit Act is often described as “highly prescriptive and increasingly cumbersome and inflexible,” which not only confuses consumers but also imposes unnecessary costs for businesses. In response to this, the government intends to transfer a major portion of the Act from statute to the Financial Conduct Authority (FCA), allowing the regulator to swiftly respond to emerging developments in the consumer credit market.
One of the key goals of the reform is to simplify technical terms, ensuring that consumers clearly understand the protections they are entitled to. This will not only benefit consumers, but also make it easier and more cost-effective for businesses to comply with the regulations. According to John Glen, the Economic Secretary to the Treasury, “The Consumer Credit Act needs to be reformed to keep pace with the modern world. We want to create a regulatory regime that fosters innovation but also maintains high levels of consumer protection.”
By the end of this year, the government plans to release a consultation on the direction of the reform. This consultation will provide an opportunity for stakeholders to share their input and feedback on the proposed changes to the Consumer Credit Act.
Overall, the government aims to establish a more efficient and effective regulatory framework for consumer credit within the UK. Through the revamping and streamlining of the existing legislation, they hope to encourage innovation in the industry, while ensuring that the interests of consumers remain protected. The reform of the Consumer Credit Act marks a major milestone in achieving this objective.
Useful links:
– Financial Conduct Authority (FCA)
– UK Treasury
