On 2 August 2018, the FCA published Discussion Paper 18/7: Review of retained provisions of the Consumer Credit Act: Interim report (DP18/7).
The FCA is required by statute to review the Consumer Credit Act 1974 (CCA) and to report to HM Treasury by 1 April 2019. The review must consider whether the repeal of CCA provisions would adversely affect the appropriate degree of protection for consumers. In particular the review must consider:
- which CCA provisions could be replaced by FCA rules or guidance under the Financial Services and Markets Act 2000; and
- the principle that a burden or restriction which is imposed in relation to the carrying on of an activity should be proportionate to the benefits.
In DP18/7 the FCA sets out an initial report on its review of the CCA. However, it is not intended to be a draft of the FCA’s final report and does not include proposed recommendations to HM Treasury but does indicate, in broad terms, the FCA’s direction of thinking on the issues.
The FCA has approach the review through three inter-related themes – rights and protections, information requirements and sanctions – and its initial thinking is as follows:
- rights and protections: the protections offered by the CCA provisions continue to be relevant, and should remain in some form, either in legislation or FCA rules. However, the FCA emphasises that for most provisions in this theme, they could not be repealed and replaced by FCA regulation without adversely affecting the appropriate degree of consumer protection. A full list of the key provisions within this theme are set out on page 27 of DP18/7;
- information requirements: the FCA’s preliminary view is that the substantive information disclosure obligations set out in the CCA and its regulations could be replaced by FCA rules. However, the resulting loss of the associated sanctions, including unenforceability, could affect the appropriate degree of consumer protection. A full list of the key provisions within this theme are set out on page 44 of DP18/7; and
- sanctions (including enforceability): the FCA has taken the stance that it would not be possible to replicate or replace the sanctions of unenforceability (without a court order or during breach) or disentitlement to interest and default sums under the FCA’s general rule-making power. The initial view taken by the FCA is that the sanctions should be retained in legislation, and that the substantive information disclosure obligations should, where appropriate, be moved into FCA rules and be subject to the CCA sanctions. A full list of the key provisions within this theme are set out in chapter 7 of DP18/7.
The deadline for comments on DP18/7 is 2 November 2018.