On 25 March 2019, the FCA published its final report (the Report) on its review of retained provisions of the Consumer Credit Act 1974 (CCA). The FCA took over responsibility for regulating consumer credit in April 2014. As part of the transfer, Parliament repealed some CCA provisions and some were replaced by FCA rules. The FCA was then required to undertake a review of the remaining provisions – this Report follows on from the FCA’s interim report of August 2018.
The review of retained CCA provisions was conducted along the following themes:
- rights and protections. This theme includes credit brokerage fees, connect lender liability, variation of agreements, default and enforcement, credit-tokens, pawn-broking, withdrawal and cancellation, early repayment, termination, time orders and unfair relationships. The FCA takes the view that the protections offered by these provisions continue to be important, and should be retained in some form. A small number of provisions covered by this theme could, in principle, be replaced by FCA rules that could achieve a comparable standard of consumer protection;
- information requirements. This includes pre-contract disclosure, the form and content of agreements and the provision of copy documents. They also include post-contractual requirements like statements and notices. Some of these must be provided periodically, or when triggered, while others apply only upon request. Information requirements include pre-contract disclosure, the form and content of agreements and the provision of copy documents. Whilst a framework for the provision of information by firms to customers continues to provide important consumer protection, for most of the substantive information disclosure obligations in the CCA and its regulations, the FCA believes these could in principle be replaced by FCA rules. However, the loss of the associated sanctions, including unenforceability could adversely affect the appropriate degree of consumer protection. The FCA concludes that there is merit in repealing the relevant information requirements and replacing them with FCA rules so long as corresponding sanctions are not lost; and
- In the context of consumer credit markets, the FCA views that a combination of the CCA sanctions, the FCA’s regulatory powers and the private right of action under the Financial Services and Markets Act 2000 is appropriate. The FCA considers that the provisions giving rise to unenforceability and disentitlement could not be repealed without adversely affecting the appropriate degree of consumer protection. As such, there is merit in retaining the sanctions in the CCA or other legislation, subject to reviewing the scope of their application.