To ask His Majesty's Government what plans they have to strengthen consumer protection measures, particularly for loans, for the 2023–24 financial year.
Answered on
5 June 2023
The government is committed to promoting high standards of consumer protection, to ensure that everyone can benefit from high quality financial services, including in the consumer lending market.
On 16 June 2022, the government announced its intention to reform the Consumer Credit Act 1974, which forms a key part of the regulation of consumer credit (including personal loans), and recently consulted on the strategic direction of reform. Modernising the CCA will ensure that protections afforded to consumers are fit for purpose and are in step with technological advancements and product innovation. The government will seek to maintain high levels of consumer protection and consider what changes are required to existing protections to ensure better consumer outcomes. The government intends to publish a response to this consultation soon and develop detailed reform proposals ahead of a second consultation in due course.
The government is also working to bring currently unregulated Buy-Now Pay-Later (BNPL) products into Financial Conduct Authority (FCA) regulation, recognising the potential detriment these products may pose to consumers. On 14 February 2023, the government published a consultation on the draft legislation that will bring BNPL products into FCA regulation in a proportionate way. This consultation closed on 11 April. The government is now carefully considering stakeholder feedback and is finalising its approach.
In addition, the Government legislated in the Financial Services Act 2021 to require the FCA to consult on whether it should make rules giving regulated financial service providers a duty of care over their customers. Following extensive engagement with stakeholders, the FCA published a final Policy Statement on 27 July 2022 on its new Consumer Duty. The Consumer Duty will clarify and raise expectations for the standard of care that should be provided by financial services firms to consumers. The rules will come into effect for new and existing products in July 2023.