The UK government says it will reform the "highly prescriptive and increasingly cumbersome and inflexible" Consumer Credit Act, moving much of it from statute to sit under the FCA to foster innovation while maintaining consumer protections.
The Act, which came into force in 1974, regulates all credit card purchases and personal loans, governing billions of transactions every year.
The government says that it now confuses customers while adding unnecessary costs to businesses when implementing its requirements.
By moving much of the Act to sit under the FCA, the aim is to be quickly respond to emerging developments in the consumer credit market, rather than having to amend existing legislation.
It will also, says the government, simplify ambiguous technical terms to make clear to consumers what protections they have - and make it easier and more cost effective for businesses to comply with regulation.
The changes are also designed to help lenders more easily provide credit for emerging and new technologies such as electric cars.
Economic Secretary to the Treasury, John Glen says: "The Consumer Credit Act has been in place for almost 50 years - and it needs to be reformed to keep pace with the modern world. We want to create a regulatory regime that fosters innovation but also maintains high levels of consumer protection."
A consultation is expected to be published by the end of the year outlining the government’s proposals and seeking views from stakeholders.
UK Finance chief David Postings applauded the move, saying: "Replacing this outdated legislation with regulatory rules that are suited to the modern world is the best way to protect consumers while allowing lenders to innovate and compete."