In May 2025, HM Treasury launched its Phase One consultation on reforming the CCA, marking the most significant opportunity in over fifty years to reshape consumer credit regulation.

The consultation paper is refreshingly candid: the CCA is “poorly adapted to technology that was not even conceived of fifty years ago”. It predates the internet, smartphones, and even the barcode. No wonder firms have struggled to comply with rules designed for a paper-based world.

The government’s proposals target three of the most outdated and burdensome areas of the CCA.

1. Information requirements

The government proposes repealing all CCA information requirements and recasting them, where appropriate, into the FCA Handbook. This shift to a more flexible, outcomes-based model aligns with the Consumer Duty and allows firms to focus on clarity and relevance rather than rigid templates. As someone who’s spent years interpreting prescriptive disclosure rules, I can say with confidence: templates don’t guarantee understanding. They can even obscure it.

This reform opens the door to innovation, particularly in digital channels, while maintaining consumer protection. It’s a smart, proportionate move that reflects how credit is actually delivered in 2025.

2. Sanctions and enforceability

Under the current regime, a minor technical error, like a misdated notice, can render an agreement unenforceable. That’s not proportionate, and it’s not just. The proposed repeal of the sanctions regime is long overdue. The FCA’s existing enforcement powers, combined with the Consumer Duty and access to the FOS, provide a more coherent and modern framework for consumer protection.

Importantly, this doesn’t leave consumers without remedies. Breaches of FCA rules can still give rise to claims under FSMA or (potentially) the unfair relationship provisions in the CCA. But the days of “paperwork perfection” causing disproportionate consequences may finally be numbered.

3. Criminal offences

The consultation also questions whether certain criminal offences under the CCA still serve any real purpose. The government is right to ask. Many of these provisions are obsolete and create unnecessary risk and confusion. If they’re not being enforced, they shouldn’t remain on the books.

This reform is more than a tidy-up; it’s a regulatory reset. The direction of travel is clear: repeal much of the remaining CCA and recast key conduct requirements into the FCA Handbook, particularly CONC. This raises important questions:

Will FCA rules offer the same legal certainty as primary legislation?
The Handbook is more flexible, but also more open to interpretation. That means firms may face greater ambiguity, especially in enforcement scenarios.

Could this lead to regulatory drift?
With more power devolved to the FCA, there’s a risk of expectations evolving faster than firms can adapt. Smaller firms, in particular, may struggle to keep pace without clear guidance or resources.

What about consumer rights?
Phase two of the reform agenda will explore how to preserve consumer protections within the new framework, including consideration of whether similar outcomes could be delivered by the FCA rulebook, or whether they will need to be retained or updated in legislation. This will, of course, provoke some interesting debate. For example, whether the unfair relationship provisions have created unnecessarily fertile ground for litigation.

The urgency is real. The CCA turned fifty last year, and the gap between its framework and today’s credit landscape has never been wider. Over 84% of UK adults now hold credit products. The non-mortgage lending market exceeds £200 billion. And more than 28,000 firms are authorised by the FCA to carry out credit activities.

New products like Buy-now Pay-later are reshaping consumer behaviour, and digital platforms are redefining how credit is accessed and managed. Yet the legal scaffolding remains stuck in the 1970s.

The government’s ambition is clear: to create a streamlined, modern regime that supports innovation and growth, without compromising consumer protection. It’s a bold vision, and one the industry has been waiting too long to see realised.

The consultation closed on 21 July 2025. The industry now awaits the government’s response and the launch of Phase two, which will tackle deeper structural reforms, including rights and protections, scope, and consequential legislative changes.

For firms across the sector, the stakes couldn’t be higher. If the final reforms deliver on the promise of this consultation, we could be looking at a once-in-a-generation reset.

The government has pledged to “move at pace to implement real change”. If it follows through, this long-overdue breakup with the CCA could mark the start of a more balanced, forward-looking relationship between regulation, innovation, and consumer outcomes.