Treasury

2024 marked the 50th anniversary of the passage of the Consumer Credit Act 1974. The world, the way people interact with their finances, and the consumer credit market are dramatically different today and the transformation in 50 years has been vast—79% of the public now hold at least one regulated credit product, new products such as “buy now, pay later” have come to the market, and digital technology has transformed how people use and take out credit.

It is perhaps not surprising that the legislation has not kept up. While it was well designed for its time, the CCA is increasingly under strain to deliver for the way consumers and firms now use and provide credit. The existing legislation and supporting regulations are poorly adapted to technology that was not envisaged 50 years ago. Successive updates over time have created a complex and prescriptive regime. In 2014 work was commenced to modernise the regime, with many CCA provisions being repealed and recast into Financial Conduct Authority rules in the consumer credit sourcebook, and the Government are continuing this work.

The Government have identified opportunities to deliver a modernised consumer credit regime that aims to ensure that consumers receive clearer information at the right time, utilising technological developments, enabling them to make informed financial decisions throughout the consumer journey, as well as simplified rights and protections that achieve proportionate regulation while achieving robust consumer protection.

Modernising the CCA aims to achieve a more agile, flexible and proportionate regulatory regime that better supports innovation and economic growth alongside robust protection for consumers. This will enable firms to better tailor products and consumer journeys to achieve good consumer outcomes, in line with the broader FCA consumer duty principle. It also brings consumer credit in line with the modern UK model of financial services regulation, whereby the scope of regulation is determined by Parliament, with the detailed conduct rules set by the regulator.

The policy statement published today outlines the Government’s approach to reform of the CCA, which will be delivered via the forthcoming financial services and markets Bill. The FCA is also publishing a statement on its direction regarding CCA reform measures announced today.

The policy statement is available at:

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At Mansion House 2025, as part of the financial services growth and competitiveness strategy, my right hon. Friend the Chancellor of the Exchequer confirmed her intention to uphold the ringfencing regime to safeguard financial stability and depositors while taking forward meaningful reform to update the regime and support the Government’s growth agenda. In response, His Majesty’s Treasury has, in close collaboration with the Bank of England, undertaken a review of the regime.

The review has now concluded, and its findings can be found in the review report “Safeguarding Stability, Enabling Growth”, published on gov.uk. The Government will take forward reforms to the regime to enable the ringfenced banks to provide more productive funding to UK business and the real economy, supporting the Government mission to deliver sustainable economic growth.

The ringfencing regime will continue to uphold the financial independence of ringfenced banks and protect retail depositors from volatility in global financial markets.

The Government will take forward reforms in five key areas:

As part of the upcoming financial services and markets Bill announced in the King’s Speech, the Government will take forward primary legislation to:

Address unnecessary duplication, by enabling the Prudential Regulation Authority to remove ringfencing rules where the objectives of ringfencing are already met by other prudential requirements or the resolution regime.

Enhance regulatory flexibility, through removing elements of primary legislation that are overly prescriptive.

The independent Monetary Policy Committee of the Bank of England decided at its meeting ending on 3 February 2022 to reduce the stocks of UK Government bonds and sterling non-financial investment-grade corporate bonds held in the asset purchase facility by ceasing to reinvest maturing securities. The Bank ceased reinvestment of assets in this portfolio in February 2022 and commenced sales of corporate bonds on 28 September 2022, and sales of gilts acquired for monetary policy purposes on 1 November 2022. The sales of corporate bonds ceased on 6 June 2023, with a small number of outstanding corporate bonds reaching maturity on 5 April 2024. Therefore, the APF is now comprised solely of gilts.

The Chancellor at the time agreed a joint approach with the Governor of the Bank of England in an exchange of letters on 3 February 2022 to reduce the maximum authorised size of the APF for asset purchases every six months, as the size of APF holdings reduces.

Since 11 November 2025, when the maximum authorised size of the APF was last reduced, the total stock of assets held by the APF for monetary policy purposes has fallen further, from £555 billion to £524.9 billion. In line with the approach agreed with the Governor, the authorised maximum total size of the APF has therefore been reduced to £524.9 billion, comprising entirely of gilts.

The risk control framework previously agreed with the Bank will remain in place, and HM Treasury will continue to monitor risks to public funds from the APF through regular risk oversight meetings and enhanced information sharing with the Bank.

There will continue to be an opportunity for HM Treasury to provide views to the MPC on the design of the schemes within the APF, as they affect the Government’s broader economic objectives and may pose risks to the Exchequer.