The Finance and Leasing Association (FLA) has added its voice to calls to update the 45-year-old Consumer Credit Act (CCA).
The call comes as the FLA set out its recommendations for improvements that the incoming government must adopt in order to transform customer protection in the credit market.
However, the FLA believes the CCA is failing customers, delaying the speed at which lenders can step in to offer customers in financial difficulty more time to make payments. It also requires lender to send “old fashioned”, severely worded letters to customers facing financial difficulties.
According to the FLA, the CCA has also not kept up with innovations in the motor finances sector that could help the uptake of low emission vehicles. It added the act makes it “unnecessarily complex” to finance a vehicle and its charging point in the same transaction.
The FLA also recommends that a single, intuitive source of information is created for small businesses looking for finance. Ideally, the FLA said that this should be able to diagnose the type of finance required, signpost where to find it and provide links to local growth hubs. This would mean the quality of business advice would be consistent across the country.
Stephen Haddrill, director general of the FLA, said: “Government should reform the CCA urgently.”
Consumers, he said, “need to be given a credible promise of legislation that will deliver appropriate protections for the 21st Century”.
Haddrill added: “It’s not clear whether a small business could find, in one sitting, all of the information needed to decide on the appropriate finance for them. Remedying this would be a great step to improving UK productivity.”