Following HM Treasury’s policy statement on Consumer Credit Act (CCA) reform, which builds on its July 2023 consultation response, and the FCA's supportive response, we could be moving towards the most significant overhaul of consumer credit regulation in decades.
The proposed reforms would signal a broader shift from a prescriptive, statute-driven framework towards a more flexible, FCA-led outcomes-based model, increasingly shaped by Consumer Duty and regulatory supervision.
What Is Being Proposed?
The reform agenda is broad, but several key themes are emerging clearly:
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Greater FCA rulemaking authority, replacing many of the detailed legislative requirements currently set out in the CCA itself
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Increased emphasis on Consumer Duty and the delivery of good customer outcomes, rather than technical compliance with prescriptive rules
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Modernisation of disclosures and communications, with a clear shift towards digital-first engagement
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Continued focus on consumer protection, including meaningful support for customers in financial difficulty
- Retention of important consumer safeguards, including Section 75 protections for credit card purchases
Taken together, these themes point towards a regulatory environment that rewards firms who can demonstrate genuine commitment to fair customer outcomes, rather than those who simply meet the letter of detailed statutory requirements.
The Future of APR: A Debate Worth Watching
One of the more thought-provoking areas within the reform proposals concerns the future role of Annual Percentage Rates (APRs).
APR has long been central to consumer credit disclosures, providing a standardised measure of borrowing costs designed to help consumers compare products. However, HM Treasury has recognised an ongoing debate about whether APRs, in isolation, always deliver meaningful consumer understanding in practice.
This is particularly relevant in sectors such as motor finance, where product structures and the impact of compound interest can result in APR figures that some consumers find difficult to interpret in practice.
What This Means for Firms
The proposed reforms place greater weight on firms being able to evidence good customer outcomes, effective governance and fair treatment. These principles will be familiar to those who have engaged seriously with Consumer Duty.
For motor finance businesses in particular, this reform agenda does not arrive in isolation. It sits alongside the ongoing uncertainty around the FCA's motor finance compensation scheme, where legal challenges have already pushed potential payouts back to at least October 2026. The overall direction of travel from the regulator is clear: firms are expected to demonstrate that their governance, sales processes and customer communications deliver genuinely fair outcomes, not simply technical compliance.
Implementation timelines for CCA reform remain unconfirmed, and a phased, multi-year transition is widely anticipated. However, firms that begin strengthening their frameworks now will be far better placed when the changes arrive.
How ITC Compliance can help
At ITC Compliance, we have been supporting our network of motor dealers and other consumer credit firms through successive waves of regulatory change, from the introduction of Consumer Duty to rate spread caps in motor finance. We understand that keeping pace with an evolving regulatory landscape, while running a business day-to-day, is a genuine challenge. As a principal firm, we will continue to monitor developments closely as the CCA reform agenda progresses, and to support our Network Members with
practical, proportionate guidance. Whether the focus is on governance frameworks, sales process oversight, customer communications or evidencing good outcomes, we are here to help.
If you would like to discuss how ITC Compliance can support your business in preparing for the changes ahead, please get in touch: www.itccompliance.com/contact
