Category: Policy Statement

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FCA publishes motor finance consumer redress schemes

On 30 March 2026, at around 4:45pm, the UK Financial Conduct Authority (the FCA) published a press release, updated its webpage and published Policy Statement 26/3: Motor Finance Consumer Redress Scheme (PS26/3) (covering 584 pages).

But that was not all. The FCA also published (in addition to PS26/3):

– Technical Annex 1 (covering 181 pages);

– Technical Annex 2 (covering 45 pages);

– consumer research survey (covering 46 pages) and a technical report analysing the awareness of the relationship between vehicle dealerships and motor finance companies (covering 41 pages);

– an updated diagnostic report (covering 101 pages);

– motor finance redress scheme firm-led communications (covering 42 pages) and a supporting annex (covering 89 pages);

– two factsheets: one for customers invited to join the scheme and another for customers who have complained (each being 2 pages);

– analyst briefing slides (covering 25 slides); and

– a transcript of the analyst briefing call (covering 20 pages).

To try and avoid the need to read 1,178 pages, we’ve prepared a handy one-page summary of the key features of the consumer redress schemes (if you click the imagine you should get a bigger version). But the devil is, of course, always in the detail.

If you have any questions, please contact me, Jeanette, Leanna, or Paula, or any of your other usual Walker Morris contacts.

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FCA publishes press release on proposed motor finance consumer redress scheme

Earlier today, on 4 March 2026, the UK Financial Conduct Authority published a press release on its proposals to introduce a motor finance consumer redress scheme.

Some key messages are:

– The FCA says that “if we proceed with a scheme, we are likely to make several changes“.

– If a scheme is made, the FCA expects “to publish final rules in late March” and the timing “will be outside market hours and we’ll confirm the date in advance“.  

– The FCA has not yet made any final decisions on any scheme.

– But the FCA proposes to “streamline the consumer journey to make it smoother for firms to operate“. These changes will include:

(a) removing the need to ask customers who have already complained if they want to opt out: instead consumers will be told within 3 months of the end of the implementation period if they’re owed compensation and how much.

(b) consumers receiving redress offers will be able to accept it straight-away; and

(c) firms will not need to communicate by recorded delivery: instead a range of channels will be acceptable to best meet a consumer’s needs while preventing fraud.

– The FCA is likely to introduce “an implementation period of 3 months, with up to 5 months for older agreements“.

– The FCA reminds consumers that there “is no need to use a claims management company (CMC) or law firm“.

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HM Treasury publishes consultation on proposed changes to the legislative regime for appointed representatives

Earlier today, on 12 February 2026, HM Treasury published a press release and a consultation paper on proposed changes to the legislative regime for appointed representatives.

This consultation follows the Government’s press release and policy statement, published on 11 August 2025, setting out its intention to “shore up confidence in the use of Appointed Representatives and to safeguard the future of the UK’s Appointed Representatives regime“.

The key proposals are:

– to require firms wishing to use appointed representatives to first obtain permission from the Financial Conduct Authority (which aims to ensure the principle is suitable to be authorised);

– to provide “appropriate consumer protection when things go wrong” by allowing a complainant to take a complaint to the Financial Ombudsman Service where the authorised firm is not responsible for the issue (for example, where an appointed representative acts outside of the scope of what the principal accepts responsibility for); and

– to bring appointed representatives within the scope of the Senior Managers and Certification Regime so that it is better aligned with the framework applying to authorised firms.

The consultation closes on 9 April 2026.

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FCA publishes mortgage rule review webpage

Earlier today, on 2 October 2025, the UK Financial Conduct Authority (the FCA) published a mortgage rule review webpage bringing together a summary of the FCA’s work on its mortgage rule review.

The webpage’s aim is to set out the FCA’s changes and communications and what they mean for firms.

So far, the FCA lists five important developments. These are:

– the flexibility in the FCA’s existing stress test rule in MCOB 11.6.18R (and more can be found by visiting another webpage published by the FCA);

– the FCA’s Discussion Paper on the future of the UK mortgage market (the FCA has published a webpage and the Discussion Paper; the consultation period ended on 19 September 2025);

– the changes made to MCOB to support greater choice in the mortgage market (for more, see our summary of the changes);

– the developments to the loan-to-income flow limits; and

– the FCA’s speech on mortgage reform to the Building Societies Association from May 2025.

It’s expected that this will continue to be updated in the coming weeks, months and years.

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FCA publishes policy statement setting out changes making it easier for borrowers to re-mortgage

Earlier today, on 22 July 2025, the UK Financial Conduct Authority published a news article, a press release and a policy statement setting out its changes to the the FCA Handbook, including to the Mortgages and Home Finance: Conduct of Business Sourcebook (or MCOB), aiming to make it easier for borrowers to re-mortgage.

What’s changed?

The FCA has made the following changes:

– mortgage advice and interactive dialogue: the FCA has removed the interaction trigger at MCOB 4.8A.7R(3) and associated rules and guidance in MCOB 4 and MCOB 8. This means interactions between firms and their customers should not automatically trigger advice.

– affordability assessments when reducing the mortgage term: the FCA has removed the requirement for a full affordability assessment when reducing a mortgage term by introducing MCOB 11.6.3R(6). But firms must still consider affordability under their responsible lending policy and the consumer duty and PRIN 2A.

– amending affordability assessments when re-mortgaging: the FCA has amended the modified affordability assessment in MCOB 11.9 to include new mortgage contracts with new lenders where it is more affordable than either (a) the borrower’s current mortgage or (b) a new mortgage product that is available to that customer from their current lender.

– retiring guidance: the FCA has retired guidance in FG13/7 (dealing fairly with interest-only mortgage customers who risk being unable to repay their loan) FG24/2 (guidance for firms supporting their existing mortgage borrowers impacted by the rising cost of living) (and there are some new provisions in MCOB 13.2.1AG, MCOB 13.3.8AR and MCOB 13.3.8BG).

– Gibraltar: the FCA has added MCOB 4.1.2ER to make it clear that these changes apply to any Gibraltar-based mortgage lenders who may want to lend within the UK in the future.

When do these changes come into force?

These changes come into effect straight-away.

Why has the FCA made these changes?

The changes made by the FCA aim to allow borrowers to:

– find it easier to reduce their mortgage term, helping to lower the total cost of borrowing and reduce the risk of their repayments extending into retirement;

– more easily re-mortgage with a new lender (which should help them access cheaper products); and

– be able to discuss options with their mortgage provider and get advice when they need it.

The FCA has removed guidance which has “served its purpose” to reduce the regulatory burden.

These changes are part of the FCA’s first steps to simplify its rules and increase flexibility. The FCA says the “Consumer Duty sets clearer, up-to-date standards in financial services“. The changes to the FCA’s rules, including MCOB, aim to provide “greater opportunity for innovation“.

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Financial Ombudsman Service announces change to compensatory interest levels

Earlier this week, on 15 July 2025, the Financial Ombudsman Service (the Ombudsman Service) published a press release and a policy statement, following a consultation, setting out its decision to change the level of compensatory interest it awards where it upholds a complaint.

The key changes will be:

– If a complainant can show actual loss, their actual loss will be considered when making the money award so that the complainant “is restored to their original financial position”;

– To compensate a complainant from being kept out of their money, the Ombudsman Service will continue to award compensatory interest. But instead of awarding 8% a year, it will award “a time-weighted average of the Bank of England base rate plus one percentage point” and this rate “will generally apply to the period from when the complainant was unreasonably deprived of the money, to the payment deadline” set by the Ombudsman Service; and

– If a firm fails to pay any award by the date set out in the award, a rate of 8% will be used after the deadline date for payment until it is actually paid.

The Ombudsman Service proposes to implement these changes from 1 January 2026 (but the implementation date will be confirmed “in due course”).

This is a significant step forward and re-balances what has always been a penal rate awarded by the Ombudsman Service. In 2018, I wrote a case report in Goode: Consumer Credit Reports on Carrasco v Johnson [2018] GCCR 16001 saying that the Ombudsman Service had “developed a practice of awarding interest at 8% a year” and submitted that practice was flawed because there was “no clear legal basis for the FOS to award interest at 8% a year which, given the base rates, is likely to punish firms who are required to provide redress”. I said that decision should force “a re-think of the FOS’s current policy of awarding interest at 8% a year”. Seven years on, such a re-think has finally happened and cannot be implemented a moment too soon.

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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.