The Finance and Leasing Association (FLA) has called for reform of the Consumer Credit Act to be “comprehensive” as consultation on the plans opened today (December 9).
FLA director general Stephen Haddrill called for sweeping change as the government invited comment on plans which it hopes will facilitate innovation in the credit sector and increase accessibility of credit products.
Today’s consultation launch said that reform would present an opportunity for the government to bolster existing consumer protections to ensure customers remain adequately protected in a modern and increasingly digital economy.
Haddrill suggested wide-reaching change was long overdue, stating: “The Consumer Credit Act was written back in the 1970s, and subsequent updates have merely nibbled the edge of what needed to be changed.
“We therefore welcome today’s announcement as the first stage of what must be comprehensive reform. For too long, consumers and lenders have had to deal with archaic language, complicated processes and rigid structure.
“We need a modern regime that protects consumers, facilitates innovation and is futureproofed to grow and adapt with the industry.
“The Government recognise the important role that credit plays in the economy, so we look forward to working with them to improve the regulation that underpins billions of transactions each year in the UK.”
The UK Government announced its intention to reform the CCA in June this year.
At the time HM Treasury set out an intention to move much of the existing legislation to sit within rules to be made and enforced by the Financial Conduct Authority (FCA).
The shift comes as the FCA sharpens-up the finance sector’s focus with the launch of its new Consumer Duty at a time when the cost-of-living crisis is likely to see a growing volume of people turn to finance to fund large purchases, including cars.
Last month analysis from The Car Expert suggested that finance debt for new and used cars had risen to £40 billion per year in the UK, prompting concerns that consumers may default on agreements, however.
Stating the case of the need for reform in today’s consultation document, HM treasury said that the overall objective for this reform is to “modernise and streamline regulation to the benefit of consumers and business”.
It added: “In practice, this will mean creating a simpler, more focused regulatory regime for consumer credit and modernising consumer credit regulation so that it follows more closely the approaches in other areas of financial services regulation.
“It is the government’s intention that this will result in increased access to new and innovative credit products for consumers and cost savings for UK firms. Consequently, this reform will expand consumer choice and support the UK economy to realise its full potential for growth.”
To view HM treasury’s full consultation document, click here.