– a news story on its proposals to regulate buy-now, pay-later.
The ‘Phase 1’ consultation on reform seeks views on information requirements, sanctions and criminal offences. The deadline for responding is 21 July 2025.
On BNPL, HM Treasury “intends to lay the [statutory instrument] before Parliament shortly after this responsible is published”. Once the SI is made, the FCA will then have 12 months to draft, consult on, and finalise its rules for BNPL Lending. BNPL products will then be regulated from mid-2026. The FCA will shortly publish a consultation on its rules.
On 17 March 2025, HM Treasury published a policy paper and a news story setting out a new approach to ensure regulators, and regulation, support growth.
HM Treasury says it will overhaul the regulatory system so that it:
– supports growth;
– is targeted and proportionate;
– is transparent and predictable; and
– adapts to keep pace with innovation.
HM Treasury says that its reforms “will apply to all bodies exercising regulatory powers and functions“. This will therefore include the UK Financial Conduct Authority and the UK Prudential Regulation Authority.
The proposed actions are:
– action 1: tackling complexity and the burden of regulation (which includes consolidating the Payment Systems Regulator mainly within the FCA);
– action 2: reducing uncertainty across the regulatory system (HM Treasury will look to review the number of the PRA’s and FCA’s “have regards” to identify opportunities to rationalise them and ensure a focus on their priorities; it will ensure the Financial Ombudsman Service is “set up in such a way that it works well for consumers, small businesses and for financial services firms” and reviewing some of the key criticisms of the Ombudsman); and
– action 3: challenging and shifting excessive risk aversion in the system (the review will hold regulators to account for their performance and reduce administrative costs; the aim is to strike the right balance between consumer protection and growth).
There are some key regulator pledges at Annex A. The FCA’s pledges, and the PRA’s pledges, are:
FCA
Provide a dedicated case officer to every firm within the FCA’s regulatory sandbox.
FCA
Provide 50% more dedicated supervisors to early and high growth firms, to help them navigate the regulatory system and support their growth.
FCA
Extend pre-application support to all wholesale payments, and crypto firms.
FCA
Indicate more often that the FCA is ‘minded to approve’ start ups to help them secure funding.
FCA
Simplify its mortgage and advice rules to support greater home ownership.
FCA
Welcome FCA work to review the contactless payment limits, including removing the £100 limit on individual payments.
FCA
Accelerate a review of capital requirements for specialised trading firms.
FCA + PRA
HMT will review the FCA’s and PRA’s ‘have regards’ to rationalise them and ensure a focus on their priorities.
FCA + PRA
Reduce regulatory reporting requirements for firms.
PRA
The PRA will consult this April on a matching adjustment investment accelerator aimed at reducing the time between life insurers identifying a productive investment opportunity and making that investment.
This announcement marks an important step forward in achieving a proportionate financial services regulatory system which works for both firms and for users of the services provided by firms. The devil is, of course, always in the detail and firms will no doubt be keeping a close eye on future annoucements.
On 7 October 2024, the UK Financial Conduct Authority (the FCA) published two ‘Dear CEO’ letters setting what it expects firms to do on authorised push payment (often called ‘APP’) fraud reimbursement. The letters are addressed to:
These letters quickly follow the Payment Systems Regulator’s policy statement, PS24/7, which was published on 3 October 2024 setting out new maximum reimbursement limits for APP fraud victims at £85,000 (which followed the Payment Systems Regulator’s press release and consultation on 4 September 2024). That decision came into force on 7 October 2024.
The Dear CEO letters set out the FCA’s expectations. These include:
– Anti-fraud systems and control: Firms should have effective governance arrangements, controls and data to detect, manage and prevent fraud, and regularly review their fraud prevention systems and controls to ensure that these are effective. Firms should also maintain appropriate customer due diligence controls (both at onboarding and throughout the relationship).
– Consumer duty: There is a perhaps unnecessary reminder that the consumer duty requires firms to avoid causing foreseeable harm. There is an example of such harm: a consumer becoming victim to a scam where a firm has inadequate systems to detect and prevent scams.
– On us APP fraud reimbursement: Where there are internal transfers (often called “on us” or intra-firm payments) which do not use an external payment system, the FCA is concerned that consumers may not understand that a different (and lower level) protection will be provided. Firms are required to ensure their approach complies with the consumer duty.
– Capital and liquidity: for payment and e-money institutions, the FCA reminds firms to recognise and manage their potential liability and the impact APP fraud may have on their capital and liquidity.
– Systems and controls: the FCA says firms must ensure that they have appropriate oversight, systems and controls in place to comply with its requirements.
On 20 September 2024, the UK Payment Systems Regulator (the PSR) published an updated version of its guidance entitled ‘Powers and Procedures Guidance’. Section 96 of the Financial Services (Banking Reform) Act 2013 requires the PSR to published guidance.
The guidance updates the PSR’s guidance which was first published in 2015 (and updated in 2020). The PSR’s response paper sets out the changes. These updates include:
– changes to paragraph 5.7 of the guidance: dealing with the process for opening an investigation; and
– changes to paragraph 5.12 of the guidance: dealing with flexibility for staff deployed on monitoring or enforcement to work across functions.
🚨 Earlier today, on 30 July 2024, the FCA published a consultation paper entitled ‘CP24/15 – Extending the temporary changes to handling rules for motor finance complaints’ and a press releaseproposing to extend the current pause to the time that firms have to respond to motor finance complaints about discretionary commission arrangements.
📆 The FCA says it proposes to set out its next steps in May 2025 (and not September 2024). By then, the FCA says it’ll have analysed: (a) the data it has collected from motor finance firms and (b) the outcome of Barclays’ judicial review of the Financial Ombudsman’s decision to uphold a DCA complaint.
✋ The proposed pause to 4 December 2025 will allow the FCA to (for example) consult on a redress scheme or ask firms to deal with motor finance complaints relating to discretionary commission models. Firms will not be required to respond to such complaints before 4 December 2025.
📝 The FCA also proposes to give consumers until the later of 29 July 2026, or 16 months from the date of their final response letter, to refer any complaint to the Financial Ombudsman Service.
👨💻 The deadline for responding to the consultation is 28 August 2024.
On 28 March 2024, the UK Financial Conduct Authority published a statement about the joint-authority Memorandum of Understanding which is in place between the FCA, the Bank of England, the Prudential Regulation Authority and the Payment Systems Regulator.
The statement confirms those authorities have carried out their eighth review of the MoU in 2023.
The key points are the authorities:
– consider their co-operation is “working well”;
– continue to exchange “expertise, information and data related to regulated activities”;
– continue to “work together closely on issues of common regulatory interest and seek to avoid duplication in their requirements and engagement with industry”;
– have “identified areas for future co-operation and co-ordination, including revisions to the MoU regarding proposed stablecoin regulation, embedding the reforms from the Financial Services and Markets Act 2023 (FSMA 2023), as well as further enhancing the sharing of information and data”; and
– will continue “to work, as needed, with the Treasury in its preparation of a National Payments Vision”.
Firms will therefore need to be acutely aware of the overlap, and co-operation, between authorities throughout their engagement and interaction with those authorities.
On 17 July 2023, the UK Financial Conduct Authority (the FCA) published a press release and draft guidance dealing with financial promotions on social media. This has been a hot topic for a number of years. The consultation period ends on 11 September 2023. Responses can be sent by email to gc23-2@fca.org.uk.
The key messages from the draft guidance are that:
– The FCA proposes to keep the key principles of Finalised Guidance 15/4, including its expectation that financial promotions should be standalone compliant.
– The consumer duty (which comes into force on 31 July 2023) will “raise our expectations of firms communicating financial promotions on social medium above the requirement of Principle 7 to be ‘clear, fair and not misleading’.“
– The FCA will continue to focus on compliance issues on social media (and, in particular, says firms should consider whether financial promotions for debt counselling would be appropriate given the complexity of such services).
– For unregulated buy-now, pay-later products, the promotion must outline the relevant risks and be balanced (and there’s a proposed example, in Figure 6, of a clear, fair and not misleading promotion).
– The FCA sets out its expectations on prominence standards for social media channels.
On 21 October 2021, the UK Government published a webpage and a consultation on the proposed regulation of unregulated (or, more accurately, exempt) buy-now pay-later (often called BNPL) agreements.
This consultation follows the recommendations set out in The Woolard Review, and the Government’s announcement on 2 February 2021 that it intended to bring unregulated interest-free BNPL products into regulation.
The consultation asks a number of questions and sets out some of the Government’s thoughts on how the regulatory regime may work for BNPL agreements.
On 8 June 2021, the Lending Standards Board published a consultation paper on its review of the ‘access to banking standard’ (the Standard).
The Standard aims to ensure that customers are well-informed about branch closures and the options available to them if they do not have a nearby branch. The Standard came into effect in May 2017.
The overarching principle of the Standard is:
“Customers and relevant stakeholders of a bank branch that is closing will be provided with clear, understandable, accessible documentation and information about that specific closure as soon as the bank is able to do so, also what it will mean for them and how they can continue to bank following its closure.”
