CCA Reform - An Update

The Consumer Credit Act 1974 is one of the most important pieces of UK financial services legislation. Resulting from the Crowther committee, which recommended protections for consumers, the CCA addressed exploitative lending practices, consolidating regulation into a single, prescriptive regime that was groundbreaking at the time. The intervening fifty years have seen massive changes in technology and how people purchase goods.

The reforms won’t yet feel urgent: the UK Government is currently analysing feedback from Phase 1 of their 2025 Consultation, with Phase 2 due to begin this year. However, the aim is clear: over the next few years, core elements of the CCA framework will migrate from detailed primary legislation into the FCA Handbook.

These reforms aren’t tinkering around the edges, they aim to simplify disclosure requirements and replace statutory sanctions with a more flexible, regulator-led approach.

There will be practical impacts including:

• Review and updates to documentation templates       

  • As prescribed statutory wording is repealed or changed, pre-contract information may need to be simplified or reformatted, and some form and content requirements might become less rigid.

  • While the main focus is likely to be on whether disclosures are clear, fair and not misleading, it’s likely that some verbatim wording requirements will remain, particularly for risk warnings.

• The old, paper-centric, focus will shift, meaning there will likely need to be a reassessment of how key information is presented in electronic formats. Those based on wording or documents designed around an A4 template embedded in digital flows will likely need a redesign.

• Proposed reforms should reduce automatic statutory sanctions. This means there may be a changed risk profile as there should be a lower litigation risk. However, this may be balanced by Courts and the Financial Ombudsman service who may scrutinise fairness more closely.

• As prescriptive statutory wording is reduced, then responsibility for ensuring clarity of meaning and customer comprehension falls to SMFs. Given the Duty of Responsibility, personal accountability will rise. Under SM&CR, responsibility for these decisions sits with named individuals. Senior Managers overseeing compliance will need to evidence the reasonable steps taken to interpret, implement and monitor the revisions

• Where documentation is simplified, those decisions must be evidenced, defensible and clearly aligned with good outcomes.

Information Requirements

The general proposal is to move information requirements from the CCA into the remit of the FCA. The existing regime is highly prescriptive, dictating what has to be disclosed to consumers, including often the form and wording – very reflective of the 1970s paper-based world.

The aim is to re-work these requirements for the digital world and to ensure improved consumer comprehension in an increasingly complex financial industry. Firms will need to evidence that disclosures are clear, fair and aligned with good outcomes.

This will also allow the FCA more flexibility with future developments.

Next steps

The Phase 2 consultation is due to open very soon, in Q1 of 2026. The usual legislative process will need to take place, followed by FCA consultations and publication of policy statements and final rules, with a likely implementation and transitional period due after that.