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HM Treasury has published its policy statement on reform of the Consumer Credit Act (CCA) 1974, confirming a more limited and targeted package of change than many expected at the start of the process. Rather than publishing a separate Phase 2 consultation, the Government says it now has enough evidence to move ahead in some areas, while leaving more complex issues for further work.
Access the full Policy statement online.
For BVRLA members, the main message is that a lot of the existing framework is not changing immediately. The Government is keeping the core distinction between consumer credit and consumer hire, and it is not changing the regulatory perimeter for consumer hire as part of this package.
That is particularly important for daily rental. Treasury explicitly states that “Hire for three months or less falls outside the regulatory perimeter in the RAO (Regulated Activities Order) so is unregulated hire”. It also confirms that “The Government is not making any changes to the regulatory perimeter for consumer hire as part of this consultation”.
In practical terms, this provides welcome consistency for a part of the market that is already working effectively. The so-called “90-day rule” is not being extended or rewritten in this reform. Instead, the Government is keeping the current boundary, while tidying the legislation so the CCA points to the definition in the Regulated Activities Order rather than duplicating it.
The statement also recognises that Personal Contract Hire and Personal Contract Purchase are different products. Treasury says consumer hire agreements are “distinct from credit agreements and do not include hire-purchase agreements”.
The bigger shift is that many detailed rules will move out of the CCA and into Financial Conduct Authority (FCA) rules. This includes areas such as cancellation, withdrawal, early settlement, termination and voluntary termination. The FCA says it will consult on key elements of the consumer credit framework and that its approach will be underpinned by the Consumer Duty.
Business lending and hire rules are also not being substantively changed, with Treasury saying the CCA will be amended to cross-refer to the RAO definition and that this has “no practical effect” beyond streamlining the legislation.
Some important issues are not being resolved now. The Government is not progressing changes to section 140A on unfair relationships at this stage, and says these complex provisions need further policy work.
The BVRLA will continue to engage as the legislation and FCA consultations develop, particularly on consumer hire, voluntary termination, affordability, customer communications and the treatment of different vehicle finance and leasing products.
For now, the key takeaway is clear: the perimeter for daily rental has not moved, PCH and PCP remain distinct, and the next phase of change will largely come through FCA rulemaking rather than further Treasury consultation.
