Category: Policy Statement

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HM Treasury publishes ‘Phase 1’ consultation on consumer credit reform, and response to feedback on plans to regulate BNPL

Earlier today, on 19 May 2025, HM Treasury published:

– a press release and a ‘Phase 1’ consultation paper on reform to the Consumer Credit Act 1974;

– an update to its consultation and its response to the feedback to its consultation on regulating buy-now, pay-later products (BNPL); and

– 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.

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HM Treasury publishes a policy paper setting out a new approach to ensure regulators, and regulation, support growth

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:

FCAProvide a dedicated case officer to every firm within the FCA’s regulatory sandbox.
FCAProvide 50% more dedicated supervisors to early and high growth firms, to help them navigate the regulatory system and support their growth.
FCAExtend pre-application support to all wholesale payments, and crypto firms.
FCAIndicate more often that the FCA is ‘minded to approve’ start ups to help them secure funding.
FCASimplify its mortgage and advice rules to support greater home ownership.
FCAWelcome FCA work to review the contactless payment limits, including removing the £100 limit on individual payments.
FCAAccelerate a review of capital requirements for specialised trading firms.
FCA + PRAHMT will review the FCA’s and PRA’s ‘have regards’ to rationalise them and ensure a focus on their priorities.
FCA + PRAReduce regulatory reporting requirements for firms.
PRAThe 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.

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Financial Conduct Authority publishes two ‘Dear CEO’ letters on authorised push payment fraud reimbursement

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:

– banks and building societies; and

– payment and e-money institutions.

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.

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FCA makes rules and guidance extending pause for handing complaints about motor finance discretionary commission arrangements

On 24 September 2024, the UK Financial Conduct Authority (the FCA) published a press release and Policy Statement 24/11: ‘Extending the temporary changes to handling rules for motor finance complaints’ (PS24/11). PS24/11 effectively implements the changes proposed by Consultation Paper 24/15: ‘Extending the temporary changes to handling rules for motor finance complaints’.

The changes to DISP Appendix 5 come into force 26 September 2024.

The key changes are:

– the pause on the requirement for firms to provide a final response to DCA complaints within 8 weeks, giving complainants the right to go to the Financial Ombudsman (which was due to end on 25 September 2024) will be extended to 4 December 2025 (see DISP App 5.2.1R(2));

– there are new requirements on keeping consumers informed about the pause (see DISP App 5.2.5AR to DISP App 5.2.5CR);

– the timeframe for consumers who receive a final response on relevant complaints to decide whether to refer their complaint to the Financial Ombudsman is extended to 29 July 2026 (at the earliest) (see DISP App 5.2.9R(3)); and

– requirements to maintain and preserve relevant records will remain in place until 11 April 2026 (see DISP App 5.3.1R(2)(b)).

There are some interesting points for firms:

– the FCA makes it clear that PS24/11 is relevant to “motor finance providers” and “motor finance credit brokers, including motor dealers“;

– the FCA’s view is that neither the original pause, nor these changes, “prevent consumers or their representatives from … taking legal action“;

– the ongoing judicial review (which is due to be heard between 15 and 17 October 2024), and the Court of Appeal cases dealing with commissions (where judgment is reserved), are relevant to the FCA’s decision making; and

– because “many motor finance agreements involving DCAs were made, or ended, more than 6 years ago, it is likely that the 3-year rule [on time-barring] will be more relevant for consumers“.

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FCA publishes policy statement and finalised guidance on ways consumer credit and mortgage firms should support customers in financial difficulty

Earlier today, on 10 April 2024, the UK Financial Conduct Authority published a press release and Policy Statement, PS24/2, setting out the new rules and guidance which will apply to consumer credit and mortgage firms to support customers in financial difficulity.

The FCA has also published updated finalised guidance, FG24/2, and a press release.

The changes made to both CONC and MCOB by PS24/2, and FG24/2, will come into force on 4 November 2024.

We’ve set out a summary in a one page infographic (if you click the infographic it should be larger):

If you want a PDF copy, please contact your usual contact at Walker Morris LLP.

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FCA’s board minutes record board’s discussion on PS23/5: Debt Packagers: Feedback to CP23/5 and final rules

Earlier this week, the UK Financial Conduct Authority (the FCA) published its board minutes from the meeting held on 25 May 2023.

Debt management firms may be interested to note that the board discussed the proposed policy statement on debt packagers. The FCA later published Policy Statement 23/5: Debt Packagers: Feedback to CP23/5 and final rules on 2 June 2023 (the FCA’s press release is available by clicking here and you can read my earlier post on the changes to CONC).

The following key points were noted by the FCA’s board members:

– the FCA’s team assured the board that any consequential risk on capacity in the debt advice sector from introducing the ban should be minimal and absorbable; and

– the Board was comfortable with the rationale for setting the implementation period at four months, and concluded that this, along with the mitigating steps the team proposed the FCA take during that period, was sufficient to appropriately balance the interests of firms with the urgent need to protect consumers from the harm.

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The Mortgage Charter and changes to MCOB to help borrowers

Mortgage lenders have had a busy time recently. The Government has published the Mortgage Charter (which is a voluntary charter that first charge lenders can sign up to) and the FCA has published Policy Statement 23/8 to enable firms to do what the charter requires. For more on the changes to MCOB, please see my earlier post.

We’ve put our heads together at Walker Morris towers to produce a one page summary of what the changes are and what firms need to do. If you click on it, you’ll get a bigger version of it.

If anyone needs a PDF copy with the embedded links (shown in the image as underlining), please contact me, Jeanette Burgess or Hasan Siddique.

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FCA publishes Handbook Notice 110 setting out changes to CONC and MCOB

At the end of June 2023, the UK Financial Conduct Authority (the FCA) published Handbook Notice 110. This set out changes made to the FCA Handbook 2 June 2023 and 30 June 2023. These include:

– changes to CONC 8.3 and TP8 (and changes to PERG 2.9 and PERG 17.7) resulting from the Consumer Credit (Debt Packager Remuneration from Debt Solution Providers) Instrument 2023. This introduces rules and guidance banning debt packers from receiving remuneration from debt solution providers and came into force on 2 June 2023.

– changes to MCOB 11.6 resulting from the Mortgage Affordability Rules (Amendment) Instrument 2023. This implements the Mortgage Charter and allows lenders to offer borrowers a switch to interest-only repayments for six months and a term extension to reduce their monthly repayments and switch back within six months (for more, please see Policy Statement 23/8: Mortgage Charter: enabling provisions and the FCA’s press release). These changes came into force on 30 June 2023.

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FCA publishes policy statement and finalised guidance on its Consumer Duty for retail firms

On 27 July 2022, the UK Financial Conduct Authority published a press release, a webpage, a policy statement and finalised guidance on its consumer duty for retail firms. The FCA is clear that it will “set higher and clearer standards of consumer protection across financial services and require firms to put their customers’ needs first“.

Together with my fellow partners, Noline Matemera and Robin Penfold, we’ve prepared a one page infographic on six key takeaways:

There is no doubt that there is a lot of work for firms to do between now and implementation.

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FCA publishes policy statement banning motor finance discretionary commission models and making minor changes to commission disclosure rules

Earlier today, on 28 July 2020, the FCA published a policy statement, PS20/8, banning motor finance discretionary commission models and making minor changes to commission disclosure rules. The FCA also published a press release.

My one page summary is (and you can see a bigger version if you click on it):

If you want a pdf copy, please get in touch: russell.kelsall@TLTsolicitors.com.