UK government set to reform 50-year-old Consumer Credit Act
Plans to modernise UK consumer credit laws to cut costs for businesses and simplify rules for consumers have been announced by the government.
The commitment is to reform the Consumer Credit Act – which regulates all credit card purchases and personal loans. The near-50-year-old Consumer Credit Act, which governs billions of credit card purchases and loans each year, is described as “highly prescriptive and increasingly cumbersome and inflexible – confusing consumers and adding unnecessary costs to businesses when implementing its requirements”.
The government said it aims to move much of the Act from statute to sit under the Financial Conduct Authority (FCA) – “enabling the regulator to quickly respond to emerging developments in the consumer credit market, rather than having to amend existing legislation”.
It also aims to simplify ambiguous technical terms to make clear to consumers what protections they have - and make it easier and more cost effective for businesses to comply with regulation.
Economic Secretary to the Treasury, John Glen said: “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. That’s why I have committed to undertake this ambitious long-term reform.”
The government said a consultation on the direction of reform is expected to be published by the end of the year.
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