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‘CCA reform can’t be delayed, derailed, or decreased in scope’

During her opening address at the Finance & Leasing Association 2023 annual dinner in London’s Mayfair in mid-February, Rebecca McNeil, chair of the FLA, struck a defiant tone on the topic of reform of the Consumer Credit Act. Alejandro Gonzalez reports.

The 1974 Act, which provides the regulatory framework for administering personal loans and consumer hire agreements, has long been on the reform wishlist by FLA members, associates and friends – 1,200 of which attended the event at JW Marriott, Grosvenor House.

“CCA reform can’t be delayed, derailed, or decreased in scope,” McNeil, who is also CEO of Close Brothers Retail, told the black-tie audience.

Rebecca McNeil, chair of the FLA

The FLA’s seven-year campaign for root and branch reform of the Act was rewarded in June 2022 when the government (then under PM Boris Johnson) agreed to include CCA reform in its agenda for improving economic growth and productivity.

At the time, Stephen Haddrill, director general of the FLA, said: “We welcome the announcement as the first stage of what must be comprehensive reform. For too long, consumers and lenders have had to deal with archaic language, complicated processes and rigid structure.”

But despite the CCA beginning its reform journey in December 2022 – with a consultation process currently underway that will close on 17 March 2023 – McNeil’s tone spoke to the wider political uncertainty that has prevailed over British politics since Boris Johnson lost the confidence of his party in mid-2022.

McNeil’s ruminations on 2022 saw her describe some of the year’s events as “not particularly edifying,” a veiled reference perhaps to the short-lived prime ministership of Liz Truss, whose stint as PM during September and October last year was marked by a mini-budget that led to serious turmoil in the financial markets followed by the resignation of her Chancellor and, eventually, her own resignation.

Despite citing reasons to be cheerful about the outlook for the UK economy, including the Bank of England’s latest assessment which “suggests the recession will not be as long or as deep as previously thought,” and a return to form for providers of asset finance in the second half of 2022 (FLA provided £148bn of new business in 2022, up 21% on 2021), the political backdrop for championing CCA reform remains unclear and could yet derail the FLA’s hopes for legislative reform.

“Looking forward, we’ll see a general election no later than December 2024, possibly autumn 2024, so campaigning starts now. The Government has its priorities and so does our industry,” McNeil said, describing CCA reform as bringing “much-needed modernisation.”

Underscoring McNeil’s comments about CCA reform is the question of how committed the government of Rishi Sunak is to the modernisation of the Act and what role reform of personal loans and consumer hire agreements may play in his, and his Chancellor’s, plan to revive the economy.

Even if we assume a degree of continuity between the economic reform agenda of Boris Johnson – the initial backer of CCA reform this year – and that of his party rival Sunak, the process of shepherding a non-emergency Bill through parliament to its Royal Assent, is likely to come up against several competing (short-term) agendas as electioneering takes hold in the months ahead.

According to Hannah White of the Institute for Government, writing in January about the challenges that Rishi Sunak faces in 2023: “Being put on an election footing so early into their terms in office risks reducing ministers’ political appetite for the longer-term planning so necessary to address the nation’s current problems.”