July 2026 FCA Regulatory News: What Compliance Teams Need to Know

The latest FCA regulatory update contains several important developments for compliance professionals, including changes to the Motor Finance Compensation Scheme, increased scrutiny of financial promotion approvals, new Skilled Person statistics and enforcement action by the ICO. In this monthly compliance update we summarise the key regulatory developments and explain what they mean for FCA regulated firms.

Consumer Duty

We've had a couple of pieces of FCA feedback in relation to the duty and a consultation, the first is feedback on products and services, offering guidance on good practices and areas for improvement which can be found here:  Products and services: good practice and areas for improvement | FCA

The regulator's key suggestions include:

1. Conducting a customer impact assessment when designing a new product to ensure compatibility with the needs of the target market, potentially supplemented by a vulnerable customer impact assessment.

2. Utilising outcomes monitoring data to perform deep dives to identify the true causes of customer difficulties and taking action to reduce their impact or likelihood. For example, firms may adjust communication if they find customers do not understand certain terminology or address specific causes of frustration, such as delays in processing.

3. Establishing clear structures for engagement with distributors.

Throughout this feedback, it is evident that the FCA encourages continuous improvement in product design to enhance the customer experience rather than a once and done attitude.

Secondly a blog on outcomes monitoring which is worth a read: Outcomes monitoring: why understanding the consumer experience matters and where firms should focus | FCA. It repeats some of the messages we have previously had from the FCA in relation to outcomes monitoring, which is a good thing I suppose, consistency and all that. It highlights the need to first identify, at a granular level, what a good outcome is for customers (and/or groups of customers) before defining the data which informs you to what extent these outcomes are happening; it does provide some further key insight, especially for smaller firms and how to implement the duty proportionally. 

Finally, the FCA is consulting on proportionality in applying the duty. This will be particularly relevant for smaller firms, as the FCA proposes measures to provide greater certainty regarding where and how the Duty applies proportionately. They emphasize that "We don’t expect all firms to apply the same approach to meet the outcomes-focused rules of the Duty." The consultation aims to clarify how different firms might need to consider customer vulnerability in various ways. Find the consultation here: CP26/23 Consumer Duty: scope and proportionality | FCA

Remuneration

The FCA have opened a consultation on reforming the rules covering remuneration in solo-regulated firms: CP26/27: Remuneration: Solo-regulated firms’ rules reform | FCA

Motor Finance Scheme partially suspended

The FCA has announced that the Upper Tribunal has made an order suspending parts of the scheme. It will hear legal challenges to the scheme on 14-18 December at the earliest. The Tribunal has also made an order suspending parts of the scheme which enables firms to keep preparing, progressing complaints as far as possible, while avoiding duplicating work if the challenges succeed.

The partial suspension confirms that firms are not required to calculate or pay redress, or send communications about compensation owed under the scheme, but firms must comply with all rules which are not suspended, including:

• Identifying relevant complaints and agreements.

• Gathering the data needed to identify commission arrangements and disclosure practices.

• Responding to complainants who are not owed compensation under the scheme by the relevant scheme deadlines, except:

  • Where the firm considers the complaint was out of time when the scheme was made.

  • Where the complaint involves a contractual tie and the firm is relying on the ‘captive lender’ exception to conclude that no unfair feature was present.

• Tell complainants the outcome of any non-scheme aspects of a mixed complaint where the complaint covers matters both within and outside the scheme and the firm says they are not owed compensation for the scheme parts.

• For brokers, provide lenders with requested documents or information, or confirm they do not hold them, within 1 month of the request.

• Work with claims companies to resolve instances where consumers are represented by more than 1 party.

• Cooperate fully and promptly with the Financial Ombudsman Service on any existing complaints that have been referred to it.

The FCA has also published a new document: “Further information for firms on the Motor Finance Compensation Scheme”. This aims to answer a number of common questions the FCA has recently received.

Review of Financial Promotion Approvers

The FCA is increasingly concerned about financial promotion approvals, having found that some firms approved adverts with unsubstantiated claims or allowed retail investors to see promotions intended for third-party templates instead of doing proper checks themselves.

The review assessed 10 authorised firms that approve financial promotions for businesses which are not authorised by the FCA, in the Buy Now Pay Later, crowdfunding and corporate finance sectors.

FCA Skilled Person reports

In 2025/26, the FCA used their skilled person power in 31 cases, out of which they appointed the skilled person in 5 cases, and the firm appointed the skilled person in 26 cases. The highest number of cases took place in the insurance (7) and wholesale sell-side (6) sectors, with 5 cases in retail banking and 2 cases in the consumer finance sectors.

The reviews examined several regulatory issues including the Consumer Duty, financial crime, governance and culture, market abuse, oversight of ARs, quality of advice, resolution wind down and risk management.

In the same period, 19 skilled person reviews were completed, at a total cost of £47.6m, averaging £2.5m per review.

ICO fines firm £300,000

The Information Commissioner’s Office found that KRA Consultancy Ltd had targeted people in financial difficulty with spam texts. The company sent over £5.5 million unsolicited direct marketing texts between April 2022 and May 2025, promoting debt solutions to people who had already been turned down for loans.

More than 60,000 complaints were made to the ICO and Mobile UK’s 7726 spam reporting service.

KRA also sent fabricated bailiff threats, which had been designed to frighten recipients into engaging with the company’s debt services. They were sent using the sender ID: DEMAND.

The company was not registered with the Financial Conduct Authority.

The company resumed unlawful marketing activity following the search warrant, which led to 161 new complaints.

What next?

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.