HM Treasury is undertaking a major reform of the Consumer Credit Act 1974, the legislation that has governed consumer credit for the past 50 years. The objective is to modernise the regime, reduce outdated and overly prescriptive requirements, and better align the law with digital credit products and the FCA’s current regulatory framework.

A first phase of proposals was published last year. Further proposals, focusing on consumer protections and remedies, are expected in early 2026, although timings may shift. While implementation will take place over a longer period, decisions made in the next year will be critical in determining how flexible and effective the future regime will be.

The Government published its long-awaited Financial Inclusion Strategy in November, with a strong focus on access to affordable credit and tackling problem debt. Political and regulatory attention on these issues is expected to continue.

The CCTA has consistently emphasised that access to regulated credit is a core part of financial inclusion. Where regulated lending withdraws, demand does not disappear and can instead be displaced towards higher-risk or illegal alternatives. Ensuring that regulation supports consumer protection while maintaining sustainable access to credit will remain a key issue in policy discussions.

Buy-now, pay-later products, now referred to as Deferred Payment Credit, will come under full FCA regulation from July 2026. Providers will need to be authorised and comply with core consumer credit protections, including affordability assessments, clearer disclosures and access to the Financial Ombudsman Service.

This change closes a long-standing regulatory gap affecting millions of consumers. At the same time, it raises important questions about how new requirements may affect access to credit, particularly for consumers who already struggle to borrow from mainstream providers.

Alongside these reforms, the FCA is progressing a wide range of work relevant to consumer credit, including:

• a review of the high-cost short-term credit price cap, with findings expected in 2026
• a review of the long-term impact of artificial intelligence in retail financial services, focusing on governance, fairness and outcomes rather than introducing new rules
• proposed changes to consumer credit advertising rules to reduce prescription and place greater emphasis on outcomes
• reforms to complaints reporting, senior manager accountability and expectations around workplace conduct and culture

  Together, these initiatives point towards a more outcomes-focused regulatory approach, with greater reliance on firms’ judgement, governance and evidence of consumer outcomes.

Beyond the FCA, further reforms are underway to modernise the complaints and redress framework, led jointly by the FCA and the Financial Ombudsman Service. Separately, new data protection requirements will come into force from 2026, requiring firms to have clear processes for handling data protection complaints.

These changes are intended to improve consistency and confidence in how complaints and redress are handled, but they will also require firms to review systems and processes over time.

Regulatory change is taking place against an active political backdrop. Parliamentary scrutiny of financial inclusion is increasing, and debates about access to credit, the role of different lenders and consumer protection are likely to remain prominent. Emerging political voices add further complexity to this environment.

Overall, 2026 is likely to be a year of policy development rather than immediate, wholesale rule change. However, the direction of travel is clear: a stronger focus on outcomes, proportionality and evidence, alongside ongoing debate about how regulation affects access to credit.

The CCTA will continue to engage with regulators and policymakers, contributing evidence from across the consumer credit market to support balanced regulation that works in practice for both consumers and lenders.