The UK Government is moving towards implementing a new regulatory framework for deferred payment credit agreements, aiming to balance consumer access with necessary protections. The consultation period is limited, closing on November 29, 2024, prompting stakeholders to respond quickly. The draft legislation introduces a new category of regulated credit agreement, the "regulated deferred payment credit agreement," while excluding certain loans from merchants and other specific agreements. Notably, the stringent requirements of the Consumer Credit Act 1974 will not apply, alleviating some operational burdens on firms. Instead, oversight will be provided by the Financial Conduct Authority (FCA) through its CONC rules and the Consumer Duty. A Temporary Permissions Regime (TPR) will allow unauthorised firms to continue lending while awaiting full authorisation. The article discusses the implications of these changes, including potential impacts on low-value loans and the responsibilities of lenders regarding financial promotions and due diligence on merchants. The consultation marks a significant step in the evolution of credit regulation in the UK.
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