FCA Regulatory Priorities report - Consumer finance: What firms need to know

The FCA wants a credit market that works well, helps consumers and supports economic growth. This priority shows the tension between the FCA’s objectives, with it wanting to offer space for innovation and sector growth but with some caution around protecting consumers. Whilst the FCA recognises that most consumers are provided with the credit they need, some consumers still struggle to access affordable credit.

• Consumer Credit Act 1974 reform: The biggest upcoming regulatory event for consumer credit firms is CCA reform, on which firms and the FCA are waiting for the Treasury to set out its next steps. The FCA wants to ensure it delivers a modern, outcomes-focused regime that supports innovation and good consumer outcomes.
• Firms must continue to lend responsibly, offering well-designed credit products that are fair value and meet consumers' needs: Previous examples of innovation the FCA has welcomed include debt consolidation loans with automatic settlement of existing debts, budgeting tools, and eligibility checkers for grants and benefits. Firms should review their product portfolios against the Consumer Duty’s fair value requirements and ensure their conclusions are documented and evidenced.
• Financial inclusion remains a priority: Firms should consider how to help consumers that are currently excluded from consumer finance, whether through innovation and new products, budgeting tools, checking eligibility for grants and benefits or by making referrals. Firms may also find alternative data sources, such as open banking data, helpful in lending decisions for consumers with limited or thin credit histories. The FCA will help firms deliver the potential benefits of open banking and support growth of the mutuals sector, working with the government and other stakeholders to support the commitments in its Financial Inclusion Strategy.
• Final rules on credit information are expected in H2 2026: The FCA is consulting on remedies under the Credit Information Market Study to improve the quality, coverage and consistency of credit information.
• The FCA will review the high-cost short-term credit price cap: The FCA plans to publish findings from this review in H2 2026. Firms operating in the high-cost credit space should engage with this review once published and prepare for potential changes to the cap.

The Report highlights that despite more people seeking debt advice, many consumers remain financially vulnerable and feel burdened by debt, and that not all consumers are receiving the support they need.

• Barriers to forbearance and support must be removed: Firms should make sure that consumers can access support without unnecessary barriers, working proactively to help borrowers in financial difficulty. The FCA has already strengthened protections for borrowers in financial difficulty by introducing new rules in CONC through PS24/2. Firms should audit their forbearance processes against these rules and the Consumer Duty to ensure that there no unnecessary barriers to customers being able to access support.
• Debt advice quality is a continued area of focus: The report reaffirms that debt advice must be appropriate to consumers' circumstances and include clear communications so that they can make well-informed decisions at the right time. The FCA will continue encouraging firms to improve support for consumers in financial difficulty, particularly to drive improvements in creditor behaviour and the quality of advice from debt advice firms. Debt advice providers should review the quality and clarity of their advice processes against this standard.
• The FCA plans to publish an evaluation of the persistent debt intervention in H2 2026: Firms should monitor this evaluation, as findings may inform further rule changes or supervisory action in relation to consumers carrying persistent debt balances. In particular where firms think the persistent debt regime could be changed or improved, they should consider their lobbying position.
• The FCA will continue its work with the Insolvency Service and Recognised Professional Bodies to raise standards and tackle consumer harm in the debt advice market: Professional firms operating in the debt advice market should expect increased multi-agency scrutiny.

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The Report highlights that trust and confidence that the redress system is fair and consistent is vital, and markets and firms need clarity and predictability to build confidence.

• Current focus on the motor finance redress scheme: Motor finance firms affected by the scheme will already be focused on preparing for the scheme. The FCA expects to publish final rules in late March 2026. Motor finance firms should continue to ensure they are holding sufficient financial resources and are operationally ready to engage with the scheme.
• Modernising the redress system: The FCA will continue its work with the Financial Ombudsman Service and the government to implement reforms to modernise the redress system. The FCA aims to publish a further joint FCA/Financial Ombudsman Service (FOS) Policy Statement on the proposals consulted on in CP26/9 in H2 2026. Firms should engage with the CP26/9 consultation and plan for potential changes to the complaints and redress framework. In the meantime, firms should ensure they have robust complaints handling processes.
• Claims management companies (CMCs) should deliver high-quality, fair-value services that help consumers pursue legitimate claims for redress: Consumer credit firms will be pleased to see a focus on CMCs only progressing complaints with genuine merit. The FCA will also monitor CMCs’ financial promotions to ensure they are clear, fair and not misleading, and will tackle unfair exit fees, misleading advertising and sign-ups, and multiple representation.

• Financial promotions rules are to be updated: The FCA will consult on its rules in Chapter 3 of CONC, covering financial promotions and communications, to remove unnecessary prescription, update requirements and improve alignment with the Consumer Duty. These changes will be designed to increase consumers' confidence when seeking products and services that meet their needs. Firms should monitor the FCA’s proposals following the publication of this consultation and assess the implications for their financial promotions approvals processes.
• Effective appointed representative oversight: The appointed representative population in consumer finance has grown more than in other sectors, and the FCA reminds firms that weak oversight could risk principals failing in their Consumer Duty obligations. The FCA is using data to target its resources on the highest-risk principals and their appointed representatives, helping to reduce actual or potential harm to consumers.
• The Consumer Duty – fair value: More broadly, the FCA will undertake risk-led reviews of emerging ‘high-impact’ topics, such as whether fees and charges represent fair value.
• Buy Now Pay Later regulation will commence on 15 July 2026: The FCA published its final rules for interest-free Buy Now Pay Later products from third-party lenders in PS26/1. Firms operating in this space without current consumer credit permissions must notify the FCA for the Temporary Permissions Regime (TPR). Other firms should prepare for the change the new regulation will have on the rest of the market and consider it in the context of CCA reform.
• The FCA will increasingly use data for its supervision: The FCA will analyse improved credit regulatory returns data to make quicker, more targeted interventions and to better assess how the market is functioning. Where data indicates that firms are doing the right thing, it will supervise less intensively, but it will also use data to identify outliers and take appropriate supervisory or other action where harm is identified. Firms should ensure their regulatory data returns are accurate, timely and complete – but most importantly they should consider the picture that the returns present to the FCA.
• The FCA will continue to use a wide range of data to identify firms at risk of avoiding redress liabilities: It is particularly focused on detecting indicators of phoenixing and will take appropriate supervisory action or intervention where it sees harm.
• The FCA encourages firms to experiment with AI, use its sandbox services, and look at its Innovation Pathway: The FCA also has specific services open to smaller market participants, including its Supercharged Sandbox, and will publish an evaluation report from AI Live Testing by the end of the year.
• The FCA’s review of the SMCR regime is underway: Working with the Treasury and the PRA, the FCA is reviewing the efficiency and effectiveness of the Senior Managers and Certification Regime with the aim of halving its regulatory burden. Firms should monitor this process, as changes could have significant implications for governance and accountability frameworks.
• Credit union product book reviews: The FCA will review specific closed book products to test whether they are delivering good outcomes for consumers. Credit unions holding Child Trust Fund products (which will be included within the scope of this review) should proactively review whether these products are delivering good outcomes for their customers.