The Financial Secretary to the Treasury, Mark Hoban, and the Minister for Consumer Affairs, Edward Davey, have launched the consultation.
The government announced the creation of the CPMA as part of its wider reform of the financial regulatory architecture in July.
The consultation document sets out the government’s preferred option, which is to bring consumer credit into the same regulatory regime as other retail financial services under the CPMA, which would include secured loans.
The government sees this as a real opportunity to improve the way consumer credit is regulated and to create a simpler, more responsive regime.
The government believes that this option could deliver stronger protection for consumers, remove unnecessary regulatory duplication and burdens on business, and help to address anomalies that currently mean that similar products can be regulated under different regimes.
Hoban, says: “The government is already delivering on its commitment to reform financial regulation, to avoid repeating the mistakes of the recent crisis. This is an excellent opportunity to bring the OFT’s consumer credit regulation within the CPMA, creating a single regulator for retail financial services, with a single point of contact for business and consumers.
“However, we do not underestimate the magnitude and complexity of such a reform, and recognise that any new regime must be flexible and proportionate, reflecting the diverse nature of the sector.
“We are committed to ensuring that the decision on bringing consumer credit into the scope of CPMA regulation reflects the needs of consumers and businesses, and to extensive engagement and consultation on this issue.”
But Stephen Sklaroff, director general of the Finance & Leasing Association, says: “UK borrowers currently benefit from strong regulation, recently upgraded by the new Consumer Credit Directive. Transferring responsibility to the new CPMA should therefore be seen as an opportunity to create a better and simpler regime, rather than as a solution to a problem.
“As yesterday’s market statistics showed clearly, the credit markets are currently shrinking. The government’s proposals are far reaching and could have significant potential costs. We want to work with the Government to ensure not only that any new regime is a genuine improvement, but that the transition is managed so as to minimise adverse impacts on responsible lenders and borrowers.”