2025 Year-End Regulatory Round up and What to Prepare for 2026

Here is your 2025 regulatory round up, summarising the key regulatory changes we have been left with in 2025 whilst looking forward to 2026.

What to expect in 2026

Looking ahead to 2026, regulated firms need to understand the FCA’s plans and how they will influence compliance priorities for the year. A substantial proportion of the FCA’s focus this year is on reducing duplication and burden, but there are a few upcoming key dates and deadlines that affected firms should be aware of.

Targeted Support Regime

The new regime will allow firms to provide suggestions designed for groups of consumers with common characteristics to help them make decisions on their pensions and investments. The FCA have published near-final rules to help firms prepare. Applications for permission will be open in March 2026, and the final rules will take effect from 6 April 2026.

Firms should be aware of two joint statements, one with the Financial Ombudsman Service and the other with the Information Commissioner’s Office.

Motor Finance

FCA preparation for a potential redress scheme continues. An early December Policy Statement confirmed a change to the extension date for firms sending final responses to all relevant DCA and non-DCA commission complaints to 31 May 2026.

Responses to ‘leasing agreement’ complaints have been underway again since 5 December 2025 as these are not subject to the unfair relationship provisions under the Consumer Credit Act.

For DCA and non-DCA commission complaints, the FCA expects to confirm whether or not they will be implementing a redress scheme (they do say that this is “likely” but haven’t yet gone as far as confirming there will be one) and plan to publish final scheme rules in February or March 2026.

A Dear CEO letter published on 3 December confirmed the suggested timeline. Once the final rules are published, firms will have until at least 31 May 2026 to prepare to send responses. This date may be extended – depending on the final scheme - but won’t be brought forward.

How you’ll need to prepare depends on whether you’re a lender or a broker.

For DCA and non-DCA commission complaints, the FCA has made it clear that lenders - who will most likely have responsibility for dealing with these complaints - should be progressing investigations during the ‘pause’ so that they’re able to respond promptly once the scheme is in place. Once the response pause ends, lenders will need to determine the outcome based on the FCA’s expectations in its final rules and offer any remedial action or redress promptly.

Brokers are not likely to need to lead on responding to complaints but should be aware that the FCA expects them to be able to support lenders where requested. If complaints are received, brokers should assess the content to determine whether the complaint needs to be forwarded to a lender and do so promptly.

Brokers and lenders must “maintain rigorous standards of record keeping and retention” including keeping a full record of every complaint for at least three years (not including deadline extensions and pause periods) and must maintain and preserve any records that are or could be relevant to any complaints or civil claims relating to commission or remuneration until at least 11 April 2031.

Firms may find a new Consultation of interest: Chapter 5 of the November FEES consultation sets out the FCA’s intention to recover the costs of skilled person reviews of historical DCA sales. The consultation closes on 16 January 2026.

BNPL

Deferred Payment Credit (DPC) agreements provided by third-party lenders – also known as Buy Now Pay Later – will be regulated by the FCA from 15 July 2026.

This applies where:

• The agreement is for interest-free credit which finances the purchase of goods or services and is repayable in 12 or fewer instalments within 12 months or less.

• The lender and supplier are not the same person/firm.

• There is an arrangement between a merchant and lender, so the lender becomes the legal supplier of goods and services to the customer.

Broking of DPC agreements will be exempt from regulation.

DPC lenders should now be well on the way to working towards authorisation. The Consultation Paper will be the go-to guide, highlighting the standards that those seeking to become authorised and those in the Temporary Permissions Regime need to meet. The Policy Statement and Final Rules are due in early 2026, but the CP gives an overarching view of what will be expected, and affected firms should use this, CONC, SM&CR, the Consumer Duty and the Conduct Rules to begin preparations now.

The breadth and depth of requirements – covering creditworthiness, high-level standards, the consumer credit rules, dispute resolution, data reporting and information requirements - can be overwhelming to firms not used to regulation, as can the application process. We can help. Email robert.bell@rbcompliance.co.uk. 

Financial Crime

Bolstering the industry’s ability to detect and prevent financial crime is high on the FCA’s agenda for 2026, not least due to its new role: it will become the single anti-money laundering and counter-terrorist financing supervisor for around 60,000 professional services firms, including legal and accountancy firms once the new regime is sanctioned by Parliament.

Updated guidance set out in Policy Statement 24/17 reflects the strict but proportionate response the FCA expects to see.

Proportionality in due diligence of Politically Exposed Persons has been a source of confusion. The FCA have published guidance to support understanding. In general, the FCA expects to see a risk-sensitive, case-by-case approach and that the application of enhanced due diligence should be proportionate to the risk.

Firms should ensure that systems are calibrated to avoid high numbers of false positives and that where the firm learns that criminals have infiltrated systems, a review is performed to learn how monitoring methods could be improved.

Firms should aim to understand the overarching expectations and use the Financial Crime Guide to audit good and poor practice in their own firms. The recent business-wide risk assessment multi-firm review will also be of use to firms looking to understand good and poor practice.

The FCA will continue to assess how to simplify the Handbook and Consumer Duty requirements to support innovation and growth.

Firms that track regulatory developments carefully are better positioned to protect their business and maintain compliance. The Consumer Duty promised fewer changes to the Handbook; 2025 has shown that emerging issues means firms need a clear grasp of the FCA’s expectations in fast-moving areas.

A bespoke regulatory update, curated by our in-house experts gives your firm’s Senior Management a clear view of what’s changing and what’s coming next. Instead of reacting to reforms once they’re finalised, our detailed document enables financial services firms to gain an early understanding of the themes, proposals and supervisory priorities most relevant to their activities. Contact Robert Bell to find out more.