Last month, the Financial Conduct Authority (FCA) celebrated its tenth anniversary, having successfully implemented outcomes-based regulation and attracted over $12bn in investment for the Fintech sector in 2022 alone. However, the UK’s Consumer Credit Act (CCA), a key piece of consumer credit regulation, is seriously outdated at 49 years old and fails to adequately protect consumers.
The Challenges of Current Regulation
The current regulatory framework has not kept pace with digital technologies and user behaviour, resulting in ineffective communication through terms and conditions. Additionally, a significant number of adults in the UK are not able to access credit due to thin-file status, and many consumers lack understanding about how credit scores work.
Credit reference agencies operate with little oversight, and the Financial Ombudsman has failed to provide adequate support for those in need. New forms of lending, such as Buy Now, Pay Later (BNPL), remain unregulated despite calls for action.
Modernising Consumer Credit Legislation
The UK government has finally begun updating the consumer credit regulatory regime, but this process should be more ambitious. A new rulebook is needed, along with increased accountability for credit reference agencies and an improved ombudsman system. By learning from the successful strategies employed by the FCA over the past decade, a much-needed upgrade to consumer credit regulation can be achieved.
