Car finance regulation is likely to see significant overhaul in the next few years. Changes are expected following the Government’s commitment to reform the 1974 Consumer Credit Act. The act regulates personal loans including hire purchase and PCP agreements.
Keeping pace with the modern world
Announcing the change, John Glen, Economic Secretary to the Treasury, said: “The Consumer Credit Act has been in place for almost 50 years. It needs to be reformed to keep pace with the modern world.
“We want to create a regulatory regime that fosters innovation but also maintains high levels of consumer protection. That’s why I have committed to undertake this ambitious long-term reform and it’s exactly what I’ll deliver.”
A Government spokesman said the plan was to modernise the act in order to cut costs for businesses and simplify the rules for consumers. HM Treasury will launch a consultation on the direction of the reform by the end of 2022.
A wider range of finance
Singling out EVs, the spokesman added: “The reforms will allow lenders to provide a wider range of finance whilst maintaining high levels of consumer protection. For example, we will ensure that the information a consumer receives throughout the lending process is easy to understand. Information also needs to be both screen and print-friendly. We will also ensure that lenders are able to more easily provide credit for emerging and new technologies such as electric cars. This will help millions of people embrace technological innovation.”
The reforms will build on the recommendations of the Financial Conduct Authority’s retained provisions report and the Woolyard Review. Both documents made recommendations for a reformed regime.
A great result
Stephen Hadrill, Director General of the Finance and Leasing Association, welcomed the announcement: “This is a great result. The CCA’s tendency to complicate and delay that which should be simple and quick meant that it was barely up to the task of regulating business and protecting customers during benign periods. During the pandemic, it fell well short of lender and customer expectations.”