Consumer Credit Act Solicitors UK 2025: Expert Guide to CCA Reform, Claims & Rights

Consumer Credit Act Reform 2025 - Phase 1 Consultation Changes

Understanding the Biggest Overhaul in 50 Years

On 19 May 2025, HM Treasury published its Phase 1 consultation on Consumer Credit Act 1974 reform, marking the beginning of the most significant modernisation of consumer credit regulation since the Act's introduction. The consultation, which closed on 21 July 2025, proposes transitioning consumer credit regulation from prescriptive statutory requirements to a flexible, principles-based framework administered by the Financial Conduct Authority, fundamentally changing how the UK's £200+ billion non-mortgage lending market operates across personal loans, credit cards, hire purchase agreements, motor finance, payday loans, store cards, overdrafts, and emerging products like buy-now-pay-later.

The reform addresses longstanding criticisms that the CCA has become outdated, inflexible, and poorly suited to digital credit journeys, with 28,000+ firms currently authorised to carry out credit activities facing confusing requirements split between statutory provisions and FCA rules. By repealing technical information requirements under Sections 17, 18, 55-65, and 76-89, removing draconian unenforceability sanctions for minor documentation errors across all credit types, and eliminating rarely-enforced criminal offences, the government aims to create a regime that fosters innovation while maintaining high consumer protection standards through FCA Consumer Duty principles.

• Information Requirements Repeal: Pre-contract, post-contract, and arrears information obligations moving from statute to FCA rules for all credit types
• Unenforceability Sanctions Removal: Ending automatic agreement unenforceability for technical documentation errors affecting personal loans, HP, credit cards
• Criminal Offences Reform: Reviewing canvassing, circulation to minors, and other rarely-prosecuted CCA offences across all credit activities
• Digital Credit Enablement: Supporting electronic signatures, digital disclosures for loans, hire purchase, and modern communication channels
• Phase 2 Consultation Expected: Further reforms covering scope, definitions, and key consumer rights including Section 75 credit card protection

What CCA Reform Means for All Credit Types in 2025

Consumer credit act reform creates both opportunities and risks for users of personal loans, hire purchase agreements, motor finance, credit cards, payday loans, and all other regulated credit throughout 2025 and beyond. While simplified requirements should reduce costs passed to consumers and enable innovative products like green finance and Islamic finance options, concerns exist about potential dilution of statutory protections when responsibility transfers to FCA rules. The FCA has acknowledged that some CCA provisions being repealed provide significant consumer protections that cannot be fully replicated through its current rule-making powers, particularly regarding enforcement sanctions and technical compliance requirements that have historically enabled successful unenforceability defences for personal loans and hire purchase agreements.

Phase 2 consultation, expected during 2025-2026, will address more fundamental issues including regulatory scope affecting which credit types remain covered, core definitions like fixed-sum versus running-account credit distinctions relevant to personal loans and overdrafts, and critically, the future of Section 75 credit card purchase protection—one of the CCA's most valuable consumer safeguards. Stakeholders should monitor developments carefully, as transitional periods will allow industry adaptation but may create confusion about applicable rules during implementation phases when different requirements apply to pre-existing personal loans, hire purchase agreements, and motor finance contracts versus new credit agreements.

Motor Finance Scandal 2025 - £18 Billion Redress Scheme & Section 140A Claims

Supreme Court Landmark Ruling August 2025

On 1 August 2025, the UK Supreme Court delivered its highly anticipated judgment in Johnson v FirstRand Bank Ltd, Wrench v FirstRand Bank Ltd, and Hopcraft v Close Brothers Ltd, providing crucial clarity on motor finance commission disclosure requirements under the Consumer Credit Act 1974. While dismissing claims that motor dealers owe fiduciary duties to customers or that undisclosed commissions automatically constitute bribes, the Court confirmed that high undisclosed commissions can create "unfair relationships" under Section 140A CCA, particularly when combined with misleading communications suggesting broker impartiality and customers lacking financial sophistication.

The Supreme Court's finding that a 55% commission constituted "a powerful indication" of unfair relationship has significant implications for millions of motor finance agreements including Personal Contract Purchase (PCP), Hire Purchase (HP), and Personal Contract Hire (PCH) executed between 2007 and 2024, when Discretionary Commission Arrangements (DCAs) and other commission structures operated without adequate disclosure. The judgment validated several factors the FCA had previously identified as contributing to unfairness, enabling the regulator to proceed with confidence in developing its comprehensive redress scheme announced immediately following the ruling according to FCA consultation plans.

FCA Motor Finance Consumer Redress Scheme

The Financial Conduct Authority published its consultation on the Motor Finance Consumer Redress Scheme on 7 October 2025, proposing an industry-wide compensation programme for customers treated unfairly between 2007 and 2024. The scheme addresses both Discretionary Commission Arrangements (banned in 2021 after FCA review) and other commission structures involving inadequate disclosure across hire purchase, personal contract purchase, and motor leasing agreements, with potential industry liability estimated at up to £18 billion making this one of the largest consumer redress programmes in UK financial services history.

Making Motor Finance Commission Claims Under Section 140A

Section 140A Consumer Credit Act provides powerful consumer protection through its "unfair relationship" provisions, requiring courts to consider whether credit agreement relationships are unfair to debtors based on terms, lender conduct, or any other connected matters affecting hire purchase, personal contract purchase, and all other regulated credit agreements. The Supreme Court's August 2025 judgment clarified that unfairness assessment involves multiple factors including commission size, disclosure adequacy, representations about broker impartiality, customer financial sophistication, and overall circumstances surrounding agreement formation rather than single determinative tests.

Complex motor finance commission disputes involving substantial compensation claims, lender liability challenges, or FCA redress scheme navigation often benefit from specialist financial services disputes expertise combining consumer credit law knowledge with strategic dispute resolution across regulatory frameworks and court proceedings.

Consumers with motor finance agreements from 2007-2024 including hire purchase, PCP, and motor leasing should review their documentation to identify potential claims, particularly where commission exceeded 25-30% of credit costs without clear disclosure, dealers suggested independent advice provision while earning substantial commissions, or customers lacked financial expertise to understand commission impact on interest rates charged. Professional legal advice proves essential for assessing claim strength, gathering evidence, and navigating the FCA's redress scheme once finalised or pursuing individual Section 140A court claims where appropriate circumstances exist.

Personal Loans & Hire Purchase Claims - Unenforceability & Mis-Selling

CCA Technical Non-Compliance Unenforceability Defences

Personal loans and hire purchase agreements remain subject to strict Consumer Credit Act 1974 technical requirements that, when breached, can render agreements unenforceable without court orders or disentitle creditors to interest and charges. Common unenforceability grounds include missing prescribed terms under Sections 60-65 (e.g., APR, credit amount, repayment details), inadequate pre-contract information under Sections 55-55C, signature requirement failures, improper copies provision under Sections 61-63, and default notice deficiencies under Sections 87-89 affecting creditor enforcement rights.

However, HM Treasury's Phase 1 CCA reform proposes repealing many unenforceability sanctions, making it crucial for consumers with existing personal loans, hire purchase agreements, store cards, and other regulated credit to assess technical compliance claims before reform implementation eliminates these statutory protections. Courts have historically interpreted CCA compliance requirements strictly, with even minor documentation errors potentially rendering substantial debts unenforceable, creating powerful negotiation leverage for debt reduction and settlement according to Consumer Credit Act provisions.

Irresponsible Lending & Affordability Assessment Failures

Personal loan and hire purchase lenders must conduct adequate affordability assessments before advancing credit, considering borrowers' income, expenditure, existing commitments, and credit history to ensure sustainable lending. Irresponsible lending claims under Section 140A CCA and FCA CONC rules arise where lenders fail to conduct reasonable creditworthiness assessments, advance credit to financially vulnerable consumers without adequate consideration, create debt spirals through unaffordable lending, or fail to verify income and expenditure information provided by borrowers.

Credit Card Purchase Protection - Section 75 Claims & Extended Rights

Understanding Section 75 Consumer Credit Act Protection

Section 75 Consumer Credit Act 1974 provides unique protection for credit card purchases, making card issuers jointly and severally liable with suppliers for breach of contract or misrepresentation on purchases between £100 and £30,000. This protection applies even when only partial payment (minimum 1p) was made by credit card with the balance paid by other means, provided the total purchase value fell within the £100-£30,000 range, creating powerful remedies when suppliers become insolvent, fail to deliver goods or services, or provide substandard products.

Recent case law developments have significantly expanded Section 75 applications, particularly the February 2025 High Court judgment in Bailey v Bijlani & MBNA Ltd [2025] EWHC 175 (KB), which confirmed Section 75 liability extends to clinical negligence claims involving private medical and dental treatment paid by credit card. This ruling creates important avenues for consumers to recover compensation when healthcare providers lack adequate indemnity insurance or become insolvent, as credit card companies become alternative defendants with resources to satisfy judgments even where original service providers cannot pay according to House of Commons Library analysis.

Section 75 Claims Process & Consequential Losses

Beyond recovering the purchase price, Section 75 enables consumers to claim consequential losses arising from supplier breach of contract or misrepresentation, including additional expenses incurred, damage caused by faulty goods or services, and financial losses resulting from non-delivery or service failures. Credit card companies bear the same liability as suppliers for all losses that would have been recoverable in breach of contract claims, making Section 75 particularly valuable when consequential damages significantly exceed original purchase amounts.

• Travel Disruption Costs: Accommodation, transport, and replacement bookings when holidays or flights cancelled
• Property Damage: Repair costs and consequential losses from faulty goods causing damage
• Medical Treatment Complications: Additional treatment costs, rehabilitation, and income loss from negligent procedures
• Foreign Purchases: Section 75 covers international transactions and services delivered abroad
• Supplier Insolvency: Full recovery from card issuer when supplier enters liquidation or administration

Buy-Now-Pay-Later Regulation UK 2025 - Mid-2026 Implementation

New BNPL Regulatory Framework

Parliament approved Buy-Now-Pay-Later (BNPL) regulation in July 2025, bringing the rapidly-growing unregulated credit sector into FCA oversight with rules expected to come into force mid-2026. The regulation addresses concerns highlighted in the 2021 Woolard Review about BNPL products' risks despite their popularity, with approximately 20% of UK adults—around 9 million people—holding BNPL arrangements in 2024, creating a significant consumer credit market that previously operated outside Consumer Credit Act protections alongside personal loans, hire purchase, and credit cards.

Under the new framework, BNPL providers offering third-party financed arrangements (termed "Deferred Payment Credit" or DPC) will require FCA authorisation and must comply with comprehensive consumer protection requirements including affordability assessments, clear information provision, and access to Financial Ombudsman Service complaints procedures. Importantly, merchant-provided instalment credit remains exempt under Article 60F(2) Regulated Activities Order, maintaining a distinction between third-party lending and direct retailer finance that recognises different risk profiles and business models.

Consumer Rights Under BNPL Regulation 2025

Once BNPL regulation commences mid-2026, consumers will gain significant protections previously unavailable for these products, including mandatory affordability assessments preventing unsustainable borrowing similar to personal loan requirements, standardised pre-contract information enabling informed decisions, statutory complaint rights through firm procedures and Financial Ombudsman escalation, and enhanced transparency about costs, risks, and credit implications. The regulation aims to maintain BNPL's beneficial aspects—convenient access to interest-free short-term credit—while addressing concerns about overindebtedness, particularly among younger consumers and those with limited financial experience.

Consumers should understand that BNPL regulation will not extend all Consumer Credit Act protections to these products, with the government specifically confirming that Section 75 joint liability provisions applicable to credit cards will not apply to DPC agreements. Instead, regulation focuses on conduct requirements, affordability obligations, and complaint mechanisms through FCA Principles, Consumer Duty standards, and CONC (Consumer Credit sourcebook) rules including arrears and forbearance protections ensuring fair treatment when repayment difficulties arise, aligning BNPL with protections already available for personal loans and hire purchase agreements.

Unfair Credit Relationships & Section 140A Claims - All Consumer Credit Types

Section 140A Unfair Relationship Provisions

Section 140A Consumer Credit Act 1974 provides broad consumer protection across all regulated credit types including personal loans, hire purchase, motor finance, credit cards, payday loans, store cards, and overdrafts by empowering courts to determine whether credit agreement relationships are unfair to debtors and grant appropriate relief including reducing debtor payment obligations, refunding amounts already paid, setting aside whole or partial agreement terms, or ordering compensation for unfair treatment. Unlike technical unenforceability provisions focusing on documentation compliance, Section 140A takes holistic approach considering agreement terms, lender/creditor conduct throughout relationship, and any other relevant matters creating unfairness.

The Supreme Court's August 2025 motor finance ruling demonstrates Section 140A's power to address commercial unfairness beyond strict legal technicalities, with the Court finding that high undisclosed commissions, misleading impartiality representations, and customer lack of financial sophistication combined to create unfair relationships warranting compensation. This principles-based approach enables courts to remedy unfairness across all credit types even where specific rule breaches cannot be proven, making Section 140A particularly valuable for addressing exploitative personal loan practices, excessive payday loan charges, unfair hire purchase terms, and relationship conduct that disadvantages consumers regardless of documentation technical compliance.

Common Unfair Relationship Claim Scenarios Across Credit Types

When to Instruct Consumer Credit Act Solicitors UK 2025

Complex Consumer Credit Disputes Requiring Legal Expertise

While straightforward consumer credit complaints involving personal loans, hire purchase, credit cards, or motor finance can often be resolved through direct lender negotiation or Financial Ombudsman Service referral, numerous circumstances benefit significantly from specialist legal representation. Consumer credit act solicitors UK 2025 expertise proves particularly valuable for motor finance commission claims involving Section 140A unfair relationship arguments, personal loan and hire purchase unenforceability challenges requiring detailed CCA technical analysis, payday loan irresponsible lending claims with vulnerable consumer elements, high-value disputes across all credit types where professional representation justifies costs through enhanced compensation recovery, and multi-credit portfolio challenges involving systematic lender misconduct.

The transitional period during CCA reform implementation creates additional complexity requiring legal guidance for all credit types, as consumers must navigate whether existing statutory protections or new FCA rules apply to their personal loans, hire purchase agreements, credit cards, store cards, and other regulated credit, understand limitation periods for historical claims before reform changes take effect, and assess optimal timing for pursuing unenforceability defences and Section 140A unfair relationship claims to maximise protection entitlements. Professional advice ensures consumers don't forfeit rights through premature action or delayed claims while regulatory frameworks evolve throughout 2025-2026.

Financial Ombudsman Service Complaints & Legal Representation

The Financial Ombudsman Service provides free, accessible dispute resolution for most consumer credit complaints involving personal loans, hire purchase, motor finance, credit cards, payday loans, store cards, and overdrafts, making it an excellent first recourse for straightforward cases involving FCA-regulated firms. However, legal representation becomes advisable when FOS decisions seem likely to involve complex legal interpretation affecting multiple credit agreements, when substantial compensation amounts justify professional representation costs, when firms challenge FOS jurisdiction requiring legal argument, or when consumers need to pursue court claims because disputes exceed FOS monetary limits (currently £430,000 for complaints from 1 April 2024).

Specialist consumer credit solicitors can assist with FOS complaint preparation across all credit types, ensuring evidence comprehensively addresses all relevant factors affecting personal loans, hire purchase, motor finance, and credit card claims, legal arguments present strongest interpretation of applicable CCA provisions and FCA rules, and claims articulate full extent of losses and appropriate remedies. Where FOS decisions prove unfavorable, legal advice identifies whether judicial review prospects exist or whether alternative legal routes including court claims under Section 140A or common law provide better compensation recovery opportunities given specific case circumstances across the full spectrum of consumer credit disputes.