February 2026: FCA / ICO Regulatory Update

Each month we produce a handy regulatory update covering both the Financial Conduct Authority (FCA) and the Information Commissioner's Office (ICO). Our monthly compliance regulatory update is designed to help you keep on top of the latest compliance developments.

Regulation of Deferred Payment Credit

Regulation of Deferred Payment Credit Deferred Payment Credit – commonly known as Buy Now Pay Later – will fall under the FCA’s regulatory remit from 15^th July this year. DPC refers to currently unregulated interest-free credit products, repayable in 12 or fewer instalments in 12 months or less. Final rules have now been published.

Lenders will need to either be authorised for the appropriate consumer credit permissions or be registered for the Temporary Permissions Regime from 15 May. The FCA has published a dedicated page setting out what those falling under DPC regulation need to do to prepare for regulation.

The FCA notes that DPC lending has grown from £0.06bn in 2017 to over £13bn in 2024. DPC products give consumers access to credit that is affordable and convenient, but the Government has legislated to bring DPC lending under the FCA’s remit following concerns that borrowers weren’t given enough practical information about their agreements and concerns that some lending was unaffordable.

The Final Rules demonstrate how the FCA are now able to use the Consumer Duty to underpin future intervention, rather than creating a standalone rulebook for every new market. The FCA has extended existing Consumer Duty expectations to drive DPC firms towards good customer outcomes and built on existing CONC provisions rather than drafting a new, bespoke, set of rules. The approach is focused on core outcomes (clear information, proportionate affordability checks and support for customers) while adding a few new specific prescriptive measures as targeted refinements.

Data (Use and Access) Act

The ICO have published a statement about the next phase of the DUAA implementation, which commenced on 5^th February 2026. The next phase had been long expected, with the Government confirming the date a week prior. The ICO has yet to publish guidance on a number of aspects of the law.

Most of the remaining data protection provisions of the Act have now come into force, with the exception of the requirement for firms to have a complaint procedure, which is due on 19 June 2026.

Recognised legitimate interests are now implemented, enabling firms that are able to rely on this basis to process personal data without carrying out an additional balancing test against the impact on the rights of the customer. Draft guidance is available.

Full guidance has been published for Data Subject Access Requests which clarifies that searches for information should be reasonable and proportionate. If finding the information would be unreasonable and disproportionate, firms must be able to show why and must still search for any other information within the scope of the request.

Firms should be preparing to comply with the complaints procedure requirements, including designing the process, building complaints forms, readying the procedure for publishing and updating systems and training for staff, in advance of June.

Motor Finance: Multiple Representation

The FCA’s concerns around the potential harms to consumers arising from firm handling of the motor finance commission complaints redress scheme continues. In early February they wrote to lenders to highlight what they need to do where there is more than one professional representative appointed for the same motor finance complaint.

The FCA want to make sure that lenders promptly inform customers and PRs when they identify multiple representatives. The concern is “a significant volume of complaints where it is unclear who is acting for the complainant” and that this could lead to delays in handling existing complaints due to the need to establish who is representing the customer, which could increase the risk of unnecessary termination fees.

Lenders should identify where there is more than one representative and it is not clear who is acting for the customer, and consider contacting all PRs to explain the issue and to establish who is the sole representative (with correspondence copied to the customer), ensure that communications support constructive engagement between PRs and help customers understand the implications of appointing more than one representative. They should inform all parties and close any duplicate complaints once the sole representative is confirmed.

They have also issued a joint statement with the Solicitors Regulation Authority setting out their expectations of professional representatives. They expect representatives to make sure clients have made informed decisions before they start work on their case, be clear to new clients about what termination fees they charge and undertake due diligence when onboarding, including checking that the client is not already represented.

Premium Finance Market Study

The Premium Finance Market Study has provided the FCA with some assurance that the Consumer Duty is working as intended. APRs were found to have reduced by 4.1 percentage points on average since 2022, saving an average of £8 on motor policies and £3 on home policies. They suggest that while the market is meeting the needs of many customers, high prices persist and they will continue to review individual firms’ fair value assessments.

Examples of good practice include objectively assessing prices, including APRs and fees, considering the quality of the product beyond its core benefits, and monitoring outcomes in particular for customers in vulnerable circumstances.

The regulator reiterated that where it sees high prices persist, it will challenge firms to test how fair value is being delivered and could ask firms to make changes. The FCA say that the study demonstrates that changes can be driven through direct supervisory engagement and reliance on the Consumer Duty. As a result, they don’t plan to make further rule changes or other market-wide interventions at this stage.

Firms that track regulatory developments carefully are better positioned to protect their business and maintain compliance. 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.