On 18 May 2026, HM Treasury (HMT) published a policy statement on reform of the Consumer Credit Act 1974 (CCA).

Background

In May 2025, HMT published its Phase 1 consultation on CCA reform which set out its approach to the overall reform of the CCA and detailed proposals in relation to information requirements, sanctions and criminal offences. This Policy Statement sets out HMT’s response to the Phase 1 consultation, its approach for the remaining CCA provisions and the changes it will take forward including rights and protections, scope and key definitions, any consequential changes and transitional provisions.

Summary

Following the Phase 1 Consultation, HMT has decided to take forward the following changes:

  • Information requirements: The majority of information disclosure requirements in the CCA and accompanying regulations will be repealed and recast into Financial Conduct Authority (FCA) rules subject to consultation. This covers the information to be provided to consumers as part of the pre-contract, post-contract and arrears, default and forbearance phases. The intention is that this will allow for less prescription and greater flexibility in the innovation and tailoring of products, consumer journeys and information, as well as the use of technology.
  • Sanctions: The sanctions of unenforceability without a court order, unenforceability until the breach is remediated, and disentitlement to interest and default sums will be repealed when the relevant information requirements these attach to are also repealed. HMT set out that it considers this is justified on the basis that the Financial Services and Markets Act 2000 (FSMA) and FCA regime, as well as other statutory schemes, provide a range of consumer protections including the Financial Ombudsman Service , breathing space, the Consumer Credit Sourcebook (CONC) and FCA principles including the Consumer Duty, in addition to the FCA being equipped with a wide range of supervisory and enforcement powers, such that these sanctions are disproportionate and are not compatible with the prevailing direction of the FCA’s proportionate regulatory approach.
  • Criminal offences: The criminal offences will be retained. These apply in relation to canvassing off trade premises, circulars to minors, credit reference agencies, pawnbroking and the debtor or hirer providing information about goods. HMT sets out that it considers that there is value in retaining these criminal offences to continue to serve as a strong deterrent against these harmful business practices.

HMT had originally intended to publish a Phase 2 consultation on the remaining provisions of the CCA not covered in Phase 1. However, HMT sets out in this Policy Statement that it considers that it has sufficient evidence to take forward changes in some areas without the need for further consultation. In particular, HMT is proposing that the following provisions should be repealed and either fall away or be recast into FCA rules subject to consultation:

  • Withdrawal rights (noting some parts will be retained).
  • Cancellation rights (noting some parts will be retained).
  • Early settlement and rebate rights.
  • Termination of agreements, including voluntary termination (noting some parts will be retained).
  • Securities and sureties (noting some parts will be retained).
  • Credit-token agreements, acceptance and liability for misuse of credit tokens.
  • Agreement to enter future agreement void.
  • Liability for misuse of credit facilities.
  • Interest not to be increased on default.
  • Statements by creditor or owner to be binding.

HMT will also repeal most of the provisions relating to securities and sureties and these will be recast into FCA rules, subject to consultation. Under FSMA, the FCA currently has rulemaking powers in relation to sureties only where the security takes the form of a guarantee or an indemnity.

However, HMT is also proposing that the following provisions should be retained in legislation, subject to any necessary amendments:

  • Consumer credit agreements, meaning of credit, running account credit, fixed sum credit, restricted used and unrestricted use credit, debtor-creditor-supplier agreements, and debtor-credit agreements.
  • Consumer hire agreements.
  • Linked transactions.
  • Cancellation: recovery of money paid by debtor or hirer, return of goods and goods given in part exchange.
  • Withdrawal from prospective agreement.
  • Death of debtor or hirer.
  • Protected goods, recovery of possession of goods or land, summary diligence not competent in Scotland.
  • Ineffective securities.
  • Pawnbroking.
  • Negotiable instruments.
  • Land mortgages.
  • Majority of the remaining provisions under Judicial Control (including Time Orders, interest, etc.), Ancillary Credit Businesses (including credit reference agencies), Enforcement of Act and Supplemental (including interpretation, definitions, etc.)

Finally, for certain more complex CCA provisions, HMT does not intend to make changes at this stage. This includes Section 56 (antecedent negotiations), and Sections 75 and 75A (connected lender liability), and Sections 140A-C (unfair relationships). While HMT set out that it may bring forward proposals in relation to these in future, it considers that the complexity of these provisions and wide-reaching implications of any changes mean it is important for further policy work, data analysis and stakeholder engagement to be carried out before any proposals are brought forward.

Next steps

HMT will bring forward the changes for CCA reform set out in this Policy Statement in legislation as part of the Financial Services and Markets Bill announced in the King’s Speech on 13 May.

HMT has also set out that it intends for transitional provisions to be put in place and that it will take a power in legislation to commence the provisions, to ensure that firms have enough time to prepare for the new provisions, once the FCA has designed its rules.

FCA statement on CCA reforms

In addition, also on 18 May 2026, the FCA published its response to HMT’s policy statement on CCA reform.

In particular, the FCA set out that it intends to consult on the key elements of the consumer credit framework previously set out in legislation, where it has the powers to do so, considering the whole consumer credit process, and that its approach will be underpinned by the Consumer Duty.

The FCA also explains that, in the meantime, it will continue to work closely with the HMT, Government, Parliament, consumer bodies and other stakeholders as the reform programme develops and that it will communicate openly about its emerging approach and next steps in due course.