And now for something completely different…or not! FCA Final Report on the Consumer Credit Act Retained Provisions

The FCA has published its Final Report setting out its review of the Retained Provisions of the Consumer Credit Act 1974. It will now be for the Government to decide if it wants to implement any of the FCA's recommendations – or steer a different course. Given the current focus on other issues, it would seem unlikely that any reform will be taken forward quickly.

What are the key findings?

Consistent with the Interim Report (see also our previous blog post), the FCA has focused on 3 main themes:

  • Rights and protections
  • Information requirements
  • Sanctions

Although the FCA appears to have taken on-board some of the feedback from stakeholders in the industry, it has maintained its overall position that the key CCA sanctions of unenforceability and disentitlement to interest and default sums should be retained – although there does appear to be an acceptance that the position should be carefully considered as part of any government review.

Some highlights include:

Rights and Protections

  • Looking more closely at the connected lender liability regime in Section 75 to address some of the issues identified by stakeholders – for example, the uncertainly created by new payment models especially where third party payment processing firms are involved
  • Aligning the cancellation and withdrawal regimes
  • Looking more closely at the termination provisions for hire agreements especially as market practice is changing with hire agreements becoming more mainstream
  • Simplifying the regime for liability for unauthorised payments and the interaction with the Payment Services Regulations 2017

Information Requirements

  • Replacing the information requirements with FCA rules would improve the current regime
  • There are areas where the requirements can be improved and firms may be given more flexibility to adapt to the customer's situation
  • There should not be a "lift and shift" as this is an opportunity for a detailed review so there should be detailed consumer research and testing and extensive stakeholder engagement ahead of any changes
  • A review of the variation provisions to further simplify the approach to agreed changes
  • Looking at simplifying the approach to multiple agreements

Sanctions

  • Unenforceability is a key sanction and required to ensure firms self-regulate and engage properly with the consumer although it could be refocused on where there is material harm
  • The meaning of enforcement should be clarified
  • The sanction of disentitlement to interest and default sums is important but a range of possible options could be considered to improve how and when it is applied

What's next?

It will now be for the Government to decide if it wants to implement any of the FCA's recommendations – or steer a different course. Given the current focus on other issues, it would seem unlikely that any reform will be taken forward quickly.

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