Consumer Credit Act reform: what HM Treasury decided
HM Treasury will move most CCA information rules into the FCA Handbook and drop the automatic sanctions. What changes, what stays and what to do now.
What was published
On 18 May 2026 HM Treasury published its policy statement on reform of the Consumer Credit Act 1974, with its response to the Phase 1 consultation that ran from May to July 2025. It is the government's final approach to the reform, not another consultation. The changes will be legislated through the Financial Services and Markets Bill announced in the King's Speech on 13 May 2026.
Two things are true at once. The direction is now settled, and nothing has changed yet. There is no new legislation in force, no replacement FCA rule and no commencement date. Every agreement you write today is still governed by the Act as it stands.
What is going
The government will repeal the majority of the CCA's information disclosure requirements, and those in the regulations made under it. Where they are still needed, they will be recast into FCA rules, subject to FCA consultation. That covers much of the paperwork a consumer credit business is built around: pre-contract information, agreement form and content, post-contract statements, and arrears and default notices.
The sanctions attached to those requirements go with them. Unenforceability without a court order, unenforceability until a failure is remedied, and disentitlement to interest and default sums are repealed and fall away as the information requirements they attach to are repealed.
A further group of rights will be repealed and either fall away or be recast into FCA rules: withdrawal and cancellation rights (with some parts retained), early settlement and rebate rights, termination rights including voluntary termination (some parts retained), and the rules on credit tokens. Section 129A, under which a customer gives notice of intent before applying for a time order, is repealed because the arrears notices it depends on are going; the court's power to make time orders under section 129 stays, amended.
What is staying
The government decided not to change sections 56, 75, 75A and 140A to 140C at this stage. Antecedent negotiations, connected lender liability and the unfair relationships test all stay in statute, unchanged. The CCA's criminal offences are retained too, including those on canvassing off trade premises and circulars to minors.
Those retained provisions carry more of the legal risk than the ones being removed. A missing statutory notice is a process failure; an unfair relationship finding under section 140A looks at the whole relationship, including how the lender behaved after the sale.
Recast does not mean copied
The policy statement is explicit: the government does not expect provisions that are repealed and recast into FCA rules to be replicated exactly. The FCA will decide what is needed by reference to its objectives, its powers under FSMA and its existing rules, including the Consumer Duty. In practice that means outcome-based requirements: whether the customer understood the information, not only whether a prescribed form was used.
That is already the standard the Consumer Duty sets. A firm must act in good faith towards retail customers (PRIN 2A.2.1R) and avoid causing them foreseeable harm (PRIN 2A.2.8R). Those obligations apply to every communication now, whatever replaces the prescribed forms.
What to do now
- Map your dependency on the Act. List every process, template and system rule that exists because of a CCA information requirement or sanction. That map is your change programme when the FCA consults.
- Keep complying with the current Act. Nothing is repealed until the Bill is passed and commenced. Do not stop sending a notice because it is due to be removed.
- Review your exposure under section 140A. The unfair relationships test is unchanged, so affordability, forbearance, collections and broker conduct remain the places where historic risk sits.
- Strengthen your evidence of customer understanding. Replacement rules are likely to look at outcomes. Testing communications now helps under the Consumer Duty today and positions you for the consultation.
- Name an owner. Give one senior manager responsibility for the reform programme, and record decisions as you make them.
Our view
In our view the reform moves consumer credit regulation from checking documents to evidencing outcomes. Firms that already monitor what their customers understand and experience will find the transition easier than those whose compliance is built on templates. The automatic sanctions going is welcome; it is not a reduction in accountability, because the provisions that judge fairness all stay.
Published by our FCA compliance monitoring software. Every Handbook reference in this article was checked against the provision text in our FCA Handbook mirror before publication. This is general information, not legal advice.