FCA publishes report of retained provisions of the Consumer Credit Act

Recent research by the Money and Mental Health Policy Institute shows that the distressing nature of the ‘prescribed content’ of debt letters can contribute to people in problem debt becoming suicidal. It also showed that over 100,000 people in problem debt attempt suicide each year in England.

The report also reviewed the possibility of whether the Consumer Credit Act should be scrapped, and its provisions instead incorporated into the FCA’s rule-book. It says that it is possible for the government to move the regulations on ‘prescribed content’ into the FCA’s rule-book while maintaining existing customer protections and that doing so would be an opportunity to change these regulations, to make debt letters works better for both consumers and firms.

Responding to the FCA’s review, Helen Undy, Chief Executive of the Money and Mental Health Policy Institute, said “Today’s announcement by the FCA shows there is no reason for the government not to take action to change the rules on debt letters. These rules force creditors to send intimidating letters to people in debt, written in obscure language and often featuring threats of court action right at the top. Receiving these letters on a daily basis is contributing to some people in debt becoming suicidal.”

“The government now has a critical opportunity to change the out-of-date rules on lenders’ letters, and make them easier to understand, less threatening and more clearly signpost to help and support. We urge the government to act now. Not only will that help people climb out of problem debt, it will save lives.”

Commenting on the publication of the FCA’s CCA final report, Fiona Hoyle, Head of Consumer and Mortgage and Finance the FLA said “While we are encouraged by FCA’s recognition of the need for reform and modernisation of the CCA, including in the areas of customer information, terminations and sanctions, we would like to see the necessary detailed further work progressed quickly, so that the industry can comment on substantive proposals for the future of consumer credit regulation.  We look forward to working with the Government in pursuing this work, which is now more urgent than ever.”