11 Jun 2026

Consumer Credit Act Reform: What the Changes Mean for Consumers, Lenders and Credit Professionals

HM Treasury has announced major reforms to the Consumer Credit Act, modernising consumer credit regulation for the digital age. Discover what the changes mean for consumers, lenders and credit professionals.

Consumer Credit Act Reform: What Credit Professionals Need to Know

The UK Government has announced the most significant reform of the Consumer Credit Act (CCA) since it was first introduced in 1974, with plans to modernise consumer credit regulation and better reflect the way consumers access and use credit in today's digital economy.

Published by HM Treasury on 18 May 2026, the reforms aim to provide consumers with clearer information about credit products while giving lenders greater flexibility to innovate and develop new financial solutions.

For credit professionals, lenders and organisations involved in consumer finance, the proposed changes represent a major shift in how consumer credit regulation will operate in the future.

Why is the Consumer Credit Act Being Reformed?

The Consumer Credit Act was introduced more than 50 years ago, long before online banking, mobile apps, digital lending platforms and modern credit products became commonplace.

Although the legislation has been amended over the years, many of its core provisions remain rooted in a pre-digital era. The Government believes that the current framework can be overly prescriptive, creating lengthy documentation that consumers often struggle to understand and limiting firms' ability to communicate effectively through digital channels.

The reforms seek to create a more flexible regulatory framework that can evolve alongside technology and changing consumer behaviour, while maintaining robust protections for borrowers.

Key Changes Proposed

Moving Consumer Credit Rules into the FCA Handbook

One of the most significant changes is the transfer of many detailed Consumer Credit Act requirements into the Financial Conduct Authority (FCA) Handbook.

This approach will allow the FCA to update rules more quickly as products, technology and consumer needs change, rather than relying on primary legislation.

The Government believes this will create a more agile regulatory regime while ensuring consumer protections remain in place through FCA supervision and enforcement.

Clearer Consumer Information

The reforms place a strong emphasis on improving consumer understanding.

Current statutory disclosures have often been criticised for being lengthy, complex and difficult to navigate. Under the new approach, the FCA will have greater flexibility to design information requirements that focus on consumer understanding and outcomes rather than prescribed wording and formats.

This could result in:

Simpler credit agreement information.
Better use of digital communication channels.
More personalised customer communications.
Improved accessibility for vulnerable consumers.
Information delivered at more relevant points in the customer journey.

Supporting Innovation in Consumer Finance

The Government has highlighted that existing rules can create barriers to innovation, particularly for digital lenders and emerging financial products.

By creating a more flexible framework, firms should be better positioned to:

Develop innovative lending products.
Use modern technology and digital tools.
Improve customer journeys.
Enhance accessibility and financial inclusion.
Respond more quickly to changing market needs.

This aligns with wider efforts to promote growth and innovation across the UK's financial services sector.

Consumer Protections Remain a Priority

While the reforms focus heavily on modernisation, the Government has repeatedly stressed that consumer protections will remain central to the regime.

The FCA will continue to have extensive supervisory and enforcement powers, including the ability to:

Investigate firms.
Require customer redress.
Impose fines and sanctions.
Take enforcement action against misconduct.
Apply the Consumer Duty framework.

Consumers will also retain access to the Financial Ombudsman Service (FOS) to resolve disputes.

Importantly, some of the more complex and established consumer protection provisions within the Consumer Credit Act, including Section 75 and unfair relationship provisions, will not be reformed at this stage while further policy work and consultation take place.

What Does This Mean for Credit Professionals?

For those working across credit management, lending, collections and customer support, the reforms are likely to have several implications.

Increased Focus on Consumer Understanding

The move towards outcomes-based regulation aligns closely with the FCA's Consumer Duty requirements. Firms will need to demonstrate that customers genuinely understand the products they are using rather than simply receiving prescribed disclosures.

Review of Customer Communications

Organisations may need to reassess how they communicate with consumers throughout the credit lifecycle, including:

Pre-contract information.
Statements and notices.
Arrears communications.
Vulnerability support processes.
Digital customer journeys.

Future Regulatory Change

As requirements move into the FCA Handbook, firms can expect a more dynamic regulatory environment with greater consultation and periodic updates.

Credit professionals should therefore monitor future FCA consultations and guidance closely to ensure ongoing compliance.

Industry Response

The announcement has received support from a range of industry stakeholders.

StepChange Debt Charity welcomed the opportunity to improve consumer communications and outcomes, while UK Finance described the reforms as an important step towards a simpler and future-proof consumer credit regime.

Industry representatives have broadly supported efforts to reduce complexity and modernise requirements, provided that consumer protections remain robust and implementation is carefully managed.

Looking Ahead

The publication of the Government's policy statement marks the first stage of a wider programme of Consumer Credit Act reform.

Further consultation, FCA rulemaking and legislative changes will follow before the new framework is fully implemented.

For credit professionals, the reforms signal a continued shift towards consumer-focused, outcomes-based regulation. Organisations that prioritise clear communication, customer understanding and good consumer outcomes will be well placed to adapt as the new regime develops.

Further Reading

Readers can access HM Treasury's full Policy Statement on Reform of the Consumer Credit Act 1974, attached below, for detailed information on the proposed reforms and next steps.