Mortgage & Lending in United Kingdom

Key dates

2026-11-02

The FCA published an earlier statement warning about demands for repayment of disguised-remuneration scheme loans, the possible need for a Validation Order and undue pressure in debt collection.

2026-11-05

The FCA published the intervention and the restrictions agreed with Ethica Resolve Limited and West 28th Street Limited.

Suggested considerations

• Firms servicing or collecting historic disguised-remuneration loans should identify affected portfolios, pause demands and litigation activity falling within the FCA restrictions, and confirm the precise scope of any agreed requirements with the FCA.
• Ethica should complete and evidence the required consumer communications, including the explanation that payment is not currently enforceable, and maintain records of recipients, delivery attempts and unresolved cases.
• Compliance teams should review whether correspondence, telephone contact, default notices, letters of claim and court instructions could create undue pressure or inaccurately imply that immediate payment is legally required.
• Firms should establish a vulnerability-identification and support process covering consumers experiencing health, financial or comprehension difficulties, with appropriate escalation, reasonable adjustments and management information.
• Debt servicers should verify the creditor's ownership, the chain of assignment, the original lender's regulatory status and any applicable consumer-credit permissions or exemptions before pursuing repayment.
• Legal and compliance teams should assess whether any proposed enforcement requires an FCA Validation Order or other court permission, recognising that a Validation Order is not guaranteed and that the FCA has stated that the debt may remain unenforceable if required permission is not granted.
• Firms should ensure that no default judgment is sought in the affected claims and that consumers continue to receive accurate information that formal court documents should not be ignored.
• Senior management should review outsourcing, agency and oversight arrangements where an authorised firm acts for an unauthorised debt purchaser, including conduct risk, consumer-outcome monitoring and escalation to the FCA where harm may have occurred.

What changed

Ethica must write to affected consumers explaining that they do not currently have an enforceable obligation to pay and therefore do not need to make payment at this stage. Ethica must not make further demands for payment from affected consumers in the current proposed court claim while the relevant issues remain unresolved. Ethica and West 28 must not seek default judgments against consumers who have not responded to a legal claim. Ethica must identify affected vulnerable consumers and put additional protections in place.

Key dates

2026-11-04

MPC meeting ended and the committee voted 8–1 to increase Bank Rate by 0.25 percentage points to 4%; one member voted for 4.25%.

2026-11-05

The November 2026 Monetary Policy Summary and Minutes were published and the Bank Rate increase was reported as effective.

2027-02-01

The MPC’s Market Participants Survey median expectation referenced in the minutes placed Bank Rate at 4.25% in February 2027; this is an expectation, not a scheduled regulatory change.

Suggested considerations

• Compliance, treasury and risk teams may wish to confirm that systems, product disclosures and contractual interest calculations use the revised 4% Bank Rate where applicable from the relevant effective date.
• Mortgage and consumer-credit providers should consider assessing customer communications, affordability monitoring and conduct-risk impacts for tracker, variable-rate and refinancing products affected by the increase.
• Banks and other lenders may wish to reassess interest-rate, credit, liquidity and concentration-risk assumptions, including scenarios involving inflation near 5% in 2027 Q2 and further Bank Rate increases.
• Investment firms and trading businesses should consider reviewing valuation, margin, collateral, hedging and client-risk controls for sterling rates, gilts, swaps and other rate-sensitive positions.
• Firms may wish to monitor the MPC’s identified indicators of second-round effects, including wage settlements, firms’ pricing behaviour, household and business expectations, energy-cost pass-through and economic slack.
• Governance committees may wish to document the effect of the rate decision and the Bank’s adverse and weaker-demand scenarios in applicable risk assessments, recovery planning, stress testing and customer-outcome monitoring.
• Treasury and product teams should consider verifying that forecasts and liquidity plans reflect the Bank’s warning that further tightening remains possible if elevated energy prices become persistent or feed into wages and prices.

What changed

This is a monetary-policy decision rather than a new binding compliance rule. Bank Rate increased from 3.75% to 4%, raising the reference cost relevant to floating-rate lending, tracker mortgages, treasury funding, derivatives valuation and certain contractual interest calculations. The MPC stated that monetary policy is not on a pre-set path and will be reassessed at each meeting, with particular attention to underlying pay, pricing behaviour, economic slack and the transmission of higher energy prices.

Key dates

2026-11-03

PRA and FCA publish the joint discussion paper and open the feedback period.

2027-03-05 Deadline

Deadline for responses to the discussion paper to be submitted to the PRA and FCA.

Suggested considerations

• Firms should assess the discussion paper against their size, growth trajectory, business model, lending mix, capital methodology, governance arrangements and operational-risk profile.
• Credit unions may wish to submit evidence to the PRA and FCA by 5 March 2027, including quantified costs and benefits of simplified requirements, risk-based capital treatment, revised reporting and any proposed thresholds.
• Compliance and risk teams should map current internal-audit, regulatory-documentation, capital, leverage-ratio, risk-weighted-asset, capital-add-on and stress-testing requirements so that the impact of possible future options can be assessed without assuming that any proposal is yet effective.
• Boards and senior management should consider whether planned growth, aggregator arrangements, mortgage or fixed-rate lending, outsourcing and technology investment are matched by appropriate governance, liquidity, credit-risk, operational-resilience and third-party oversight capabilities.
• Firms considering new products or services should identify statutory, prudential, conduct, systems and outsourcing barriers and document the safeguards that would be needed to support a credible response to the regulators.
• Credit unions should review current wind-down, transfer and restructuring plans and identify legislative or contractual barriers to sale of loan books, transfer of business or conversion to another mutual form.
• Industry bodies and service providers may wish to coordinate submissions on FCA fees, shared-service models, CUSO capability, third-party guidance and the practical consequences of applying Small Domestic Deposit Takers rules.

What changed

This is a discussion paper, not a consultation proposing or committing to specific policy changes, so existing PRA and FCA requirements continue to apply. The regulators are examining whether internal-audit and regulatory-document requirements could be reduced for smaller and simpler credit unions; whether larger or more complex credit unions should move to a risk-based framework with more flexible capital requirements; and whether relevant Small Domestic Deposit Takers rules, including the standardised approach for risk-weighted assets, could replace the current simple leverage-ratio...

Key dates

2026-11-03

PRA published CP15/26 for consultation.

2026-12-04

Northern Ireland Assembly consultation on the Credit Unions (Amendment) Bill closes; this is a legislative scrutiny date, not a stated PRA consultation deadline.

Suggested considerations

• Compliance teams may wish to track the Northern Ireland Assembly’s passage and final commencement provisions for the Credit Unions (Amendment) Bill rather than treating the consultation proposals as final requirements.
• Credit unions considering member referrals should assess governance, counterparty due diligence, member eligibility and service-specific responsibilities, and consider whether contracts prevent inappropriate transfer of credit risk back to the referring credit union.
• Credit unions considering loan participation should consider documenting originator and participant roles, borrower relationship ownership, underwriting and monitoring responsibilities, security and enforcement rights, default allocation, concentration limits, large-exposure treatment, provisioning and capital treatment.
• Boards and senior managers may wish to assess whether existing risk appetite, lending policies, management information, stress testing and internal controls are proportionate to the additional activities contemplated by the PRA.
• Firms may wish to map existing lending-limit, large-exposure, provisioning and capital processes against the proposed treatment of participation loans and identify data or systems changes needed before implementation.
• Credit unions that do not intend to undertake the new activities may wish to document that decision and retain evidence that their existing governance and control framework remains appropriate for their current business model.
• Affected firms may wish to monitor the PRA’s final policy statement and any revised SS2/23 or Rulebook text before committing to new products or contractual arrangements.

What changed

The PRA proposes amendments to the Credit Unions Part of the PRA Rulebook and SS2/23 – Supervising Credit Unions. Member referral arrangements would be treated as an additional activity; the receiving credit union would retain responsibility for the referred member’s credit risk, and firms would be expected to maintain effective governance, due diligence and clear contractual allocation of responsibilities.

Key dates

2026-11-03

PRA publication date for DP2/26 and FCA publication date for the parallel credit-union discussion paper DP26/1.

2027-03-05 Deadline

Deadline for responses to DP2/26, submitted to [email protected].

Suggested considerations

• Firms should consider whether to submit evidence or a response to DP2/26 by 2027-03-05, addressing the questions most relevant to their size, business model, activities and growth plans.
• Compliance teams may wish to map current prudential, reporting, governance and operational-resilience requirements against the proposed distinction between small and simple firms and larger or more complex credit unions.
• Credit unions considering growth should assess whether board expertise, senior-management capacity, capital and liquidity planning, credit-risk controls, member-servicing capability and operational resilience will scale with membership and lending volumes.
• Firms may wish to review governance and controls for aggregator-driven growth, mortgage lending, fixed-rate products, outsourced activities, third-party providers and CUSO relationships, because these are identified as areas where future safeguards or supervisory expectations may develop.
• Boards and senior managers should consider how existing responsibilities under Rule 11.5(3) of the Credit Unions Part of the PRA Rulebook are evidenced, including oversight of regulatory compliance, risk management and business growth.
• Credit unions may wish to evaluate their current solvent-exit and wind-down arrangements, including the feasibility of transferring business, selling a loan book, restructuring or maintaining continuity of member services.
• Trade associations and service organisations may wish to provide data on compliance costs, asset-based thresholds, barriers to permitted activities, common-bond expansion, CUSO use and the practical effects of different prudential models.
• Firms should monitor subsequent PRA and FCA consultations and any legislative proposals; no implementation plan or transition timetable has been established at this stage.

What changed

No rules, thresholds, permissions or supervisory requirements have been amended by DP2/26. The regulators are seeking evidence on six outcomes: proportionate regulation; consumer confidence and protection; competition and innovation; long-term sustainability; operational resilience and risk management; and orderly market exit.

Key dates

2026-11-02

The FCA published its expectations for lenders making voluntary motor finance settlement offers; the page was updated on 2026-11-03.

2026-10-01

Barclays Partner Finance identified customers whose complaints had been acknowledged on or before this date as a cohort for some early settlement offers.

2027-02-16

The scheduled start of the legal challenges to the FCA motor finance compensation scheme.

2027-03-03

The scheduled end date of the hearing window for the legal challenges to the FCA motor finance compensation scheme.

Suggested considerations

• Firms considering early settlements should assess each offer against the maximum redress that would have been available under the FCA motor finance compensation scheme, rather than using a lower discretionary amount.
• Compliance teams may wish to establish governance and second-line review for the methodology, calculations, customer segmentation and approval of settlement communications.
• Firms should consider notifying the FCA before making offers and supplying the FCA factsheet with each customer communication.
• Offer letters should clearly state the amount, calculation basis, the full-and-final effect of acceptance, the inability to claim more later, the option to reject and remain within the scheme, and the consequences for the existing complaint.
• Firms should consider allowing at least one month for customers to respond and retaining evidence that customers had sufficient information and time to make an informed decision.
• Marketing, customer-service and complaints teams should avoid language suggesting FCA endorsement, approval or validation of an individual offer.
• Firms should consider controls to prevent accepted settlements from being subsequently processed as scheme claims or referred to the Financial Ombudsman Service.
• Motor finance lenders should continue preparing for the compensation scheme and progress complaints as far as possible during the partial suspension, even if scheme compensation is not currently calculated or paid.

What changed

Lenders may make voluntary settlement offers before the partially suspended FCA motor finance compensation scheme is implemented, but the FCA expects each offer to provide at least the compensation the customer would receive under the scheme, calculated by reference to the relevant agreement and the scheme methodology. Firms intending to make offers are expected to notify the FCA, provide the FCA factsheet to customers, and ensure communications are clear, fair and not misleading.

Key dates

2026-10-07

PRA published CP13/26 proposing automatic indexation of in-scope regulatory thresholds every five years, with a proposed first update on 1 July 2031.

2026-10-14

PRA published PS19/26 setting out the final policy on high loan-to-income lending.

2026-10-22

PRA published CP14/26 consultation on phase 2 of SM&CR reform.

2026-10-26

Bank of England and FCA published the 2026 survey results on artificial intelligence and machine learning in UK financial services.

2026-10-28

PRA rules and supervisory statement on high-LTI lending commenced; the firm-specific 15% cap was removed and the revised monitoring and governance framework became effective.

2027-01-22 Deadline

Consultation deadline reported for the PRA and FCA phase 2 SM&CR consultations.

2027-02-07 Deadline

Consultation deadline for CP13/26 and the associated discussion of additional thresholds potentially suitable for indexation.

2031-07-01

Proposed date for the first automatic update of in-scope regulatory thresholds under CP13/26, subject to final policy and implementation.

Suggested considerations

• Mortgage lenders should assess their high-LTI lending strategy against risk appetite, capital and credit-risk tolerances now that the firm-specific 15% cap has been removed.
• Mortgage lenders should establish or validate rolling four-quarter calculations for individual high-LTI flows and retain evidence supporting any adjustments, limits or risk appetite decisions.
• Relevant firms should review governance, underwriting, affordability, concentration and stress-testing controls to demonstrate prudent management of high-LTI lending under the new PRA expectations.
• Compliance and regulatory-reporting teams should monitor the PRA’s quarterly aggregate high-LTI publications and assess whether lending plans remain consistent with the FPC’s aggregate 15% limit.
• PRA-regulated firms should map current Rulebook and supervisory-statement thresholds against the 128 proposed in-scope thresholds and identify systems, permissions, reporting and policy documents that would require future updates.
• Affected firms should consider submitting responses to CP13/26 and its associated discussion questions by 7 February 2027, particularly where indexation could alter regulatory categorisation, reporting, capital, liquidity, governance or investment-flexibility requirements.
• SM&CR compliance teams should assess CP14/26 against current senior-manager responsibilities, certification processes, fitness and propriety controls, governance maps, handover arrangements and recordkeeping, while treating the proposals as non-final.
• Firms should monitor the related FCA SM&CR consultation and coordinate any response because implementation may require changes across PRA and FCA regimes.

What changed

PS19/26 removes the firm-specific 15% limit on high-LTI mortgage lending, while retaining the Financial Policy Committee’s aggregate 15% limit as the benchmark for overall market lending. Firms’ individual high-LTI flows and any required adjustments will be assessed on a rolling four-quarter basis, whereas aggregate high-LTI lending will continue to be monitored quarterly. The final rules and supervisory statement also introduce governance and risk-management expectations, and the PRA intends to publish aggregate high-LTI flow data quarterly.

Key dates

2026-10-29

FCA published Fair value in consumer finance and associated supervisory commentary; the examples are effective as supervisory guidance and do not create new rules.

Suggested considerations

• Compliance teams may wish to inventory every financial and non-financial charge across each product's full customer journey and lifetime, including contingent, arrears, repeat and cumulative charges.
• Firms should consider refreshing fair value assessments to reconcile current pricing and charging data with quantified or otherwise evidenced customer benefits, product limitations, service quality and foreseeable risks.
• Firms may wish to document how assumptions, management information, customer outcomes and governance challenge support each fair value conclusion, with clear ownership and audit trails.
• Firms should consider segmenting analysis by relevant customer groups, including vulnerability characteristics, credit risk, product usage, distribution channel and customers experiencing financial difficulty, and testing whether outcomes differ materially.
• Compliance teams may wish to establish monitoring for arrears, complaints, cancellations, usage, enquiries, refunds, waivers, repeat charges and customer understanding, with defined escalation thresholds and remediation options.
• Firms should consider testing whether fees and charges are communicated clearly, prominently and at the point customers need them to make informed decisions, including through customer-understanding testing.
• Firms may wish to review controls for grace periods, charge caps, fee waivers and refunds and evidence that those controls are appropriately designed, operating effectively and reducing foreseeable harm.
• Where late or missed repayment charges are justified by reasonable costs, firms should consider documenting the cost methodology, evidence relied upon and relationship between the methodology and the charge level, alongside the separate fair value assessment.

What changed

The publication does not amend the FCA Handbook or create new mandatory actions. It consolidates good and poor practice under the existing price and value outcome in PRIN 2A.4 and FG22/5, including the requirement for manufacturers under PRIN 2A.4.2R(2) to conduct and regularly review value assessments at intervals appropriate to the product's nature and duration.

Key dates

2026-04-21

Voluntary restrictions were imposed on Kingscrown Finance Ltd.

2026-09-25

Further voluntary restrictions were imposed on Kingscrown Finance Ltd, including limits on receiving payments from existing customers and an orderly wind-down requirement.

2026-10-07

Voluntary restrictions were imposed on MOMSB Ltd and Momentus Capital Ltd, including restrictions on new customers, new lending arrangements and certain payments from existing customers, together with independent AML-framework reviews.

2026-10-09

Voluntary restrictions were imposed on Grosvenor Funding Ltd and Grosvenor Funding (North West) Ltd, including restrictions on new customers, new lending arrangements and certain payments from existing customers, together with independent AML-framework reviews.

2026-10-15

Voluntary restrictions were imposed on Abbital Ltd, including specified conditions for taking on customers, entering into lending arrangements and accepting payments, together with an independent review of its AML systems and controls.

2026-10-23

The FCA announced the restrictions and reiterated its enhanced oversight of Annex 1 firms and due-diligence expectations for regulated firms dealing with them.

Suggested considerations

• Annex 1 firms should consider reviewing their business-wide AML risk assessment, customer and beneficial-owner due diligence, ongoing monitoring, suspicious-activity escalation, governance, management information, resourcing and independent-testing arrangements against the Money Laundering Regulations 2017.
• Annex 1 firms seeking registration or under FCA assessment should consider ensuring that policies and controls are tailored to their actual lending activities, customer base, delivery channels and growth plans, rather than relying on generic or group-level documentation.
• The six named firms should consider mapping their operational processes, customer communications, payment arrangements and lending activity to the precise terms of their voluntary restrictions and preserving evidence of compliance with those terms.
• FCA-authorised firms should consider identifying all Annex 1 counterparties and refreshing onboarding and periodic-review procedures to obtain direct confirmation of registration, conduct independent verification, understand the counterparty's business model and assess whether its AML controls create heightened relationship risk.
• Regulated firms should consider recording the rationale for accepting, continuing or restricting relationships with Annex 1 firms and escalating discrepancies between a firm's registered activities, actual activities, ownership, governance or AML framework.
• Groups with multiple Annex 1 entities should consider documenting entity-specific risk assessments and controls, since group-wide or off-the-shelf procedures may not demonstrate that each entity manages its own risks effectively.
• Lenders and their service providers should consider contingency arrangements for restricted firms, including payment handling, loan-book servicing, customer communications and orderly wind-down scenarios.

What changed

Kingscrown Finance Ltd is subject to restrictions limiting how it may receive payments from existing customers and requiring an orderly wind-down of its existing loan book. MOMSB Ltd, Momentus Capital Ltd, Grosvenor Funding Ltd and Grosvenor Funding (North West) Ltd are restricted from taking on new customers or entering into new lending arrangements, subject to the specified exceptions; restrictions also apply to accepting payments from existing customers, and the firms must obtain independent reviews of their AML frameworks.

Key dates

2025-07-09

The FPC made the recommendation to amend implementation of the high-LTI flow limit, allowing individual lenders to increase their share while seeking to keep the aggregate flow consistent with 15%.

2026-04-01

The FCA consultation on the proposed high-LTI lending guidance opened.

2026-07-01

The FCA consultation closed.

2026-10-14

FG26/11, the joint FCA/PRA policy changes and the PRA supervisory statement were issued and the replacement framework took effect.

Suggested considerations

• Firms should map their regulated mortgage book against the 4.5 LTI definition, the listed exclusions and the £150 million or 300-contract de minimis test over the relevant consecutive four-quarter periods.
• Compliance and risk teams may wish to update policies, risk-appetite statements, underwriting controls and management information to reflect removal of the individual 15% cap and continued exposure to the aggregate 15% safeguard.
• Firms considering a strategy that would increase high-LTI lending above 15% should consider notifying the FCA or, for PRA-authorised firms, engaging with the PRA in accordance with the applicable supervisory arrangements before implementation.
• Firms should validate Product Sales Data submissions and establish quarterly controls for calculating individual high-LTI flows and reconciling them to the regulator’s published aggregate-flow data.
• Firms should maintain documented stress testing, affordability assessment, portfolio monitoring and governance demonstrating that high-LTI lending is managed prudently under the PRA supervisory statement.
• Firms should establish escalation and contingency procedures enabling rapid adjustment of high-LTI origination if the FCA issues temporary supplemental LTI guidance.
• Compliance teams may wish to review whether product, broker and customer communications accurately explain that the reform concerns portfolio flow limits and does not create an entitlement for an individual borrower to obtain a mortgage above 4.5 times income.
• Firms should monitor further FCA temporary supplemental guidance and PRA quarterly publications, as the market-wide mechanism can result in firm-specific reduction expectations even where the firm’s own lending remains commercially appropriate.

What changed

FG26/11 applies the FPC recommendation to firms with permission to enter into regulated mortgage contracts as lender, subject to specified exclusions. High-LTI lending remains lending at an LTI of 4.5 or above, and the aggregate high-LTI flow remains subject to the FPC’s 15% limit; however, the previous expectation that each in-scope firm must not exceed 15% has been removed.

Key dates

2026-10-14

PRA publishes SS2/26 – High loan to income lending. The statement sets out supervisory expectations and the quarterly aggregate-monitoring framework.

Suggested considerations

• Firms should determine whether they were below the de minimis threshold in both relevant consecutive four-quarter periods, using both the £150 million total-credit and 300-contract tests.
• Mortgage risk and compliance teams may wish to validate the firm’s classification of high-LTI contracts at the 4.5-times income threshold and confirm that excluded products are correctly removed from internal and regulatory monitoring.
• Boards and senior management may wish to approve explicit high-LTI risk appetite limits and management information covering current flow, forecast flow, concentrations, high-risk segments, arrears and performance outcomes.
• Firms considering a strategy that would increase high-LTI flow above 15% should prepare evidence of the supporting risk-management changes and discuss them through regular PRA supervisory engagement.
• Firms above the de minimis threshold should establish controls to reconcile internal high-LTI flow data with FCA Product Sales Data and the PRA’s quarterly aggregate publication, including a process for handling revised data.
• Mortgage lenders should maintain credible scenario plans for reducing future high-LTI originations, including underwriting, product, pricing, distribution and pipeline controls, while distinguishing future lending decisions from existing approved offers.
• Groups should document whether high-LTI governance and monitoring are operated at individual-firm or group level and ensure that group-level calculations include only relevant firms above the de minimis threshold.
• Compliance teams may wish to monitor future PRA and FCA announcements for any fractional reduction rate, implementation timetable or withdrawal of adjustment expectations, since SS2/26 does not prescribe a permanent reduction rate in advance.

What changed

SS2/26 defines high-LTI lending as regulated mortgage contracts where credit is at least 4.5 times the relevant individual or joint income. It applies to firms within the Housing Part of the PRA Rulebook, including relevant UK subsidiaries, and requires high-LTI lending to be conducted prudently under an appropriate risk-management and compensating-controls framework.

Key dates

2026-10-28 Deadline

The PRA amendments to the Housing Part of the PRA Rulebook and SS2/26 commence; the FCA replacement general guidance also comes into effect and prior FCA high-LTI guidance is replaced.

Suggested considerations

• Firms should assess whether their high-LTI risk appetite, lending plans and business model support individual high-LTI flows above 15% from 28 October 2026.
• Firms should review and, where necessary, update board-approved policies, risk appetite statements, underwriting controls, affordability assessments, portfolio limits, stress testing and management information for high-LTI lending.
• Compliance teams may wish to map existing controls and reporting to the rolling four-quarter calculation for individual flows and distinguish this from the regulators’ single-quarter aggregate monitoring measure.
• Firms should establish a process to monitor the PRA’s quarterly aggregate high-LTI publication and the FCA’s notifications regarding expected adjustments, including escalation to senior management and the board where a reduction in lending may be required.
• Firms intending to operate above 15% should consider whether they can reduce high-LTI lending smoothly and predictably towards 15% if requested, including identifying practical management actions and avoiding abrupt changes to customer or intermediary pipelines.
• Firms should confirm that further advances and retirement interest-only mortgage contracts are correctly excluded from the relevant flow calculations and that other mortgage products are classified consistently with the final rules and guidance.
• Firms using the interim PRA modification by consent or FCA individual guidance should confirm that the relevant interim directions will fall away automatically on 28 October 2026 and align systems and procedures with the final framework.
• Senior managers and boards should document oversight of high-LTI strategy, risk appetite changes, portfolio performance, concentration risk and the potential effect of aggregate market developments on future lending.

What changed

The PRA will amend the Housing Part of the PRA Rulebook and the FCA will replace FG14/8, FG17/2 and FG25/4 with new general guidance. High-LTI lending remains lending at an LTI ratio of 4.5 times income or above, with the aggregate market limit remaining 15%; the individual firm-level 15% cap is removed. Individual firm high-LTI flows and any expected reductions will be assessed on a rolling four-quarter basis, while the regulators will monitor aggregate high-LTI flow using a single-calendar-quarter measure.

Key dates

2026-03-30

The FCA published PS26/3, establishing the motor finance consumer redress scheme for relevant agreements entered into from 6 April 2007 to 1 November 2024.

2026-05-31

The FCA's general pause on handling certain motor finance complaints ended; complaints outside the scheme scope generally reverted to the applicable ordinary complaint-handling framework from 1 June 2026.

2026-06-30

The implementation period for Scheme 2, covering agreements entered into from 1 April 2014 to 1 November 2024, was scheduled to end.

2026-08-31

The implementation period for Scheme 1, covering agreements entered into from 6 April 2007 to 31 March 2014, was scheduled to end.

2027-02-16

The Upper Tribunal hearing of the legal challenges to the motor finance compensation scheme is scheduled to begin.

2027-02-26

The scheduled window for the Upper Tribunal hearing of the legal challenges is due to conclude.

Suggested considerations

• Compliance teams may wish to maintain a documented inventory of complaints, agreements, commission data, consumer communications and redress calculations so that scheme preparation can resume promptly if the legal challenges fail.
• Lenders should continue complying with all motor finance scheme rules that have not been suspended, including required notifications to consumers who are not owed compensation.
• Firms should model both principal outcomes: implementation of the scheme after judgment and resumption of ordinary complaint handling if the scheme or relevant provisions are quashed.
• Operational planning may include capacity, case-management systems, data remediation, quality assurance, customer communications and escalation procedures for the ordinary DISP complaint process.
• Finance, risk and compliance teams should consider scenario-based provisions for scheme redress, litigation-related costs and ordinary complaint liabilities, and should engage auditors regarding assumptions, evidence and disclosure.
• Firms should review whether complaints outside the scheme scope are being handled under the ordinary DISP time limits, rather than being treated as covered by the suspended scheme arrangements.
• Senior management may wish to monitor the tribunal proceedings, FCA firm updates and any subsequent judgment, appeal or amendments to CONRED and DISP requirements.
• Firms should consider customer-outcome and conduct risks arising from delayed compensation, incomplete communications, duplicated claims-management fees and inconsistent treatment of consumers during the suspension.

What changed

The Upper Tribunal hearing window is now confirmed for 16 to 26 February 2027. The scheme remains partially suspended, so lenders are not required to calculate or pay compensation under the scheme until the legal process concludes, but the suspension does not remove the requirement to comply with unaffected scheme rules, including sending specified communications to consumers who are not owed compensation. The FCA has expressly warned lenders to prepare for the possibility that the scheme, or parts of it, are quashed and that there is consequently no scheme-based complaint-handling pause.

Key dates

2027-02-07 Deadline

Deadline for responses to CP13/26 and the associated discussion-paper section.

2031-07-01

Proposed effective date for the first automatic update of in-scope thresholds, subject to finalisation of the framework.

Suggested considerations

• Consider submitting responses on the proposed framework, the proposed in-scope threshold list, the methodology and the separate discussion-paper thresholds by 2027-02-07.
• Map the firm's current and forecast assets, exposures, liabilities, lending and reporting metrics against relevant PRA thresholds, including proposed thresholds that may be revised before finalisation.
• Assess whether nominal GDP indexation could move the firm out of, or into, a threshold-defined prudential treatment from 2031 onwards, while recognising that firms growing faster than nominal GDP would still be expected to cross thresholds.
• Review regulatory reporting, capital, liquidity, governance, risk-management and policy systems that hard-code fixed threshold values or effective dates, and consider designing controlled update mechanisms for future indexed values.
• Assess the effect of the proposed five-year update cycle on business planning, acquisitions, balance-sheet growth, lending strategies and group-structure decisions.
• Consider providing quantitative evidence to the PRA on implementation costs, cliff-edge effects, reporting impacts and whether additional discussion-paper thresholds should be included.
• Monitor the final PRA policy statement, the final automatic-indexation statement of policy and the consolidated threshold list before treating any proposed uprating as a binding change.

What changed

The PRA proposes to replace the current predominantly ad hoc threshold-review process for eligible fixed nominal thresholds with a rules-based framework. In-scope thresholds would be indexed using UK nominal GDP, based on data produced by the Office for National Statistics, on a common five-year cycle; the first automatic update would take effect on 1 July 2031, subject to final policy.

Key dates

2020-11-13

The High Court disqualified Howard Roland Duckett from acting as a company director for 10 years under section 6 of the Company Directors Disqualification Act 1986.

2020-12-04

The 10-year company-director disqualification took effect and is stated to run until 2030-12-04.

2025-11-20

The FCA identified this date in consumer communications as the point after which payments requested by Beauforce should be reported; the firm was restricted from regulated activities and ordered to stop accepting consumer money.

2026-08-18

The FCA announced the prohibition of Howard Roland Duckett from performing functions in relation to regulated activities.

Suggested considerations

• Compliance teams may wish to review fitness-and-propriety checks for current and prospective senior managers, including searches for director disqualifications, litigation findings, insolvency events, and other adverse information.
• Firms should consider confirming that senior managers have disclosed all matters relevant to their approval and that changes affecting their fitness, propriety, or ability to perform an SMF are escalated and notified to the FCA where required.
• Firms should consider testing compliance with FCA Principle 11, COCON 2.2.4R, and SUP 10C.14.18R in relation to open, cooperative, and timely dealings with the FCA and notification of disqualifications or other relevant changes.
• Boards and compliance functions may wish to assess whether regulatory records, management-accountability maps, company-director registers, and evidence supporting senior-manager attestations are complete, consistent, and independently verifiable.
• Consumer-credit firms should consider reviewing controls over debt-management client payments, client-money safeguarding, communications, and contingency arrangements for transferring customers if permissions are restricted or withdrawn.
• Firms should consider screening current staff and approved persons against the FCA Financial Services Register and relevant Companies House director-disqualification information before appointment and periodically thereafter.
• Compliance teams may wish to use the case in senior-manager and conduct-risk training to reinforce that misleading the FCA or relying on fabricated information can independently support prohibition, even where the underlying misconduct occurred at an unrelated company.

What changed

The FCA made an individual prohibition order under section 56 of the Financial Services and Markets Act 2000 and withdrew Duckett’s approval to perform the SMF3 Executive Director and SMF16 Compliance Oversight functions under section 63 of that Act. This is an enforcement outcome against a specific individual rather than a new generally applicable rule. The underlying conduct included inadequate company records, repeated lies and reliance on fabricated evidence in High Court proceedings, and failure to notify the FCA of a director disqualification.

Key dates

20 March 2026

- The FCA published the statement announcing increased scrutiny of Annex 1 firms and warning that registration applications should be expected to take longer

TBD (ongoing, from the date of publication)

- Annex 1 firms that are not registered should submit a registration application before continuing Annex 1 activity, because the FCA states such firms need to be registered for AML purposes

TBD (ongoing supervisory cycle)

- Around 900 Annex 1 firms are subject to FCA information requests to support supervisory risk assessment and intelligence gathering

Suggested considerations

• Confirm whether any UK business line falls within Annex 1 scope and, if so, verify that the entity is registered with the FCA for AML purposes before continuing the activity.
• Submit a registration application immediately if the firm carries on Annex 1 activity without being registered.
• Reassess the firm’s AML framework at entity level, rather than relying on group-level policies or parent-company controls, and document why the controls are appropriate for the firm’s own risks and operations.
• Replace any generic or off-the-shelf procedures with policies, controls, and procedures tailored to the firm’s actual products, customers, geographies, and delivery model.
• Prepare evidence of MLR compliance for FCA review, including risk assessment logic, governance arrangements, customer due diligence processes, and monitoring controls.

What changed

• - The FCA is closely scrutinising applications to register as an Annex 1 firm, indicating a tougher gateway for new registrations and potentially more refusals or delay where evidence is weak.
• Annex 1 firms must demonstrate compliance with the Money Laundering Regulations, rather than merely assert that controls exist.
• The FCA is warning firms that registration applications will take longer, which affects launch plans, transaction timing, and group structuring decisions.
• The FCA has sent an information request to around 900 Annex 1 firms to better understand their activities, business models, and risks.
• The FCA says it will use this information, together with other intelligence, to identify and disrupt financial crime risks in the sector.

Key dates

18 November 2025

– Consultation on the proposed motor finance redress scheme closes (CP25/27), feeding into the final PS26/3 rules

5 December 2025 Deadline

– Firms must start sending final responses to any motor leasing complaint in line with normal complaint‑handling rules (outside the scheme‑specific pause)

1 May 2026

– FCA confirms its motor finance compensation scheme has been legally challenged, triggering the Upper Tribunal process

31 May 2026

– FCA lifts the general pause on handling certain motor finance complaints, returning many complaints to standard DISP timeframes, alongside the emerging scheme

30 June 2026

– Original end of the implementation period for loans taken out from 1 April 2014 under PS26/3 (now effectively paused for redress calculation/payment/communications)

Suggested considerations

• Identify and maintain a complete inventory of motor finance complaints and agreements that fall within the scheme scope (regulated motor finance with relevant commission arrangements between April 2007 and 2024).
• Continue to gather, centralise and validate data on commission structures, commission levels, and disclosure practices for all in‑scope agreements, including by issuing targeted information requests to brokers and dealers.
• Implement internal workflows to ensure brokers respond to lenders’ information requests within one month, or formally confirm where requested documents or data are not held.
• Review and classify complaints to determine which consumers are not owed compensation under the scheme, including cases outside scope and those lacking discretionary, high or tied commission arrangements, and prepare appropriate communications.
• Assess complaints for time‑bar issues and apply the scheme’s limitation and out‑of‑time principles consistently, documenting rationale for any reliance on time‑bar to decline redress.

What changed

• - Parts of the FCA motor finance consumer redress scheme under PS26/3 are formally suspended by order of the Upper Tribunal, on terms agreed between the FCA and four challengers (Consumer...
• During the suspension, firms are not required to calculate redress, pay compensation, or send communications about compensation owed under the scheme according to the original timetable.
• All non‑suspended rules remain fully applicable, including duties to identify in‑scope complaints and agreements, gather commission and disclosure data (including from brokers), and maintain records.
• Lenders must continue to identify relevant complaints and agreements falling within scheme scope (motor finance agreements between 2007 and 2024 with potentially unfair commission arrangements).
• Firms must continue to gather data on commission arrangements and disclosure practices, including obtaining information from brokers and confirming where such information is not held.

Key dates

9 July 2025 Deadline

PRA offers interim modification by consent applications; firms must submit business plan/risk info within 1 month, then monthly reports (first covering prior 3 months)

11 July 2025

£150M threshold increase effective

TBD 2026 Deadline

PRA consultation on permanent LTI flow limit changes (due course post-review)

30 June 2026

Interim modifications expire (or earlier if rules amended)

Suggested considerations

• Apply for modification (if seeking >15% high-LTI): Submit detailed business plan (incl. quarterly high-LTI projections), risk appetite, management frameworks; provide monthly notifications on approvals/completions.
• Monitor thresholds: Track rolling 4-quarter mortgage volumes/contracts (≥£150M and ≥300 contracts in two periods triggers limit).
• Record-keeping: Document high-LTI allowances, group allocations, exclusions.
• Respond to consultation: Provide feedback on CP6/26 proposals via PRA channels (deadline not specified in summary; check full paper).
• Engage regulators: FCA firms contact FCA for tailored guidance on high-LTI increases.

What changed

• - Review of LTI flow limit: PRA is reviewing the rule limiting new residential mortgages with LTI ≥4.5x to 15% of total new lending, following FPC recommendations; no final changes proposed yet, but...
• Threshold increase (prior update): Flow limit now triggers only for firms issuing ≥£150M in residential mortgages annually (up from £100M), effective 11 July 2025, exempting ~80 smaller lenders (up...
• Interim modification by consent: Firms can apply to disapply the 15% cap temporarily; requires submitting business plans, risk frameworks, and monthly reporting on high-LTI volumes.
• Exclusions remain: No LTI limit for re-mortgages (no principal change), lifetime mortgages, or second/subsequent charge mortgages (per historical rules).
• Group allocations: Firms in groups can share high-LTI allowances, with record-keeping required.

Key dates

6 April 2007

1 November 2024; Scope of agreements eligible for compensation

26 March 2020 Deadline

Cut-off for excluding high commission cases if clearly disclosed (firms must explain and allow FOS challenge)

2026 (this year)

Millions compensated

30 June 2026

End of implementation for 1 April 2014+ loans; lenders then have 3 months to notify complainants of redress

31 August 2026

End of implementation for 6 April 2007-31 March 2014 loans; lenders then have 3 months to notify complainants and 6 months for eligible non-complainants

Suggested considerations

• Identify all in-scope agreements (2007-2024 with broker commissions); assess eligibility against tightened criteria (e.g., undisclosed DCA/high commission/tie).
• Contact complainants within 3 months post-implementation; eligible non-complainants within 6 months; invite scheme participation (6-month consumer response window).
• Calculate redress per formula (commission-based, capped, with interest); pay promptly, allowing set-off against customer debts where applicable.
• Gather records now (FCA expectation pre-rules); handle exclusions/exceptions with explanations; prepare for FOS challenges on time-bars.
• Brokers: Respond to lender information requests.

What changed

• - Tightened eligibility: Excludes minimal commission agreements (£120 or less pre-1 April 2014; £150 or less post), zero APRs, unused DCAs, and contractual ties where lenders prove visible...
• Two schemes: Separate for 6 April 2007-31 March 2014 and 1 April 2014-1 November 2024 to mitigate legal challenges on pre-2014 powers.
• Compensation adjustments: Reflects higher 2007-2014 losses; capped in ~1/3 cases to avoid over-compensation.
• Streamlined operations: Lenders contact only complainants or eligible non-complainants; no recorded delivery required, cutting delivery costs >40%.
• Scope expansion: Covers DCAs, high commissions, and contractual ties under Consumer Credit Act 1974 ss.140A-C; includes deceased consumers.

Key dates

2024

FCA letter to CEOs of Annex 1 firms raising AML concerns.; - **Late 2025 - FCA follow-up engagement with 300 Annex 1 firms.**

Suggested considerations

• Verify Annex 1 registration status directly from the firm and via independent checks (e.g., FCA Register).
• Understand the Annex 1 firm's business model, products, and risks, aligning with MLRs and 2025 NRA.
• Manage identified risks, such as AML deficiencies or consumer encouragement into limited company structures for unregulated lending.
• Document due diligence to demonstrate compliance, integrating into broader financial crime frameworks (e.g., BWRA/CRA per FCA findings).

What changed

No new rules or legislative changes are introduced; this is a supervisory reminder reinforcing existing obligations under the Money Laundering Regulations 2017 (MLRs). It emphasizes enhanced due diligence on Annex 1 firms, referencing the 2025 National Risk Assessment (NRA) for risk management. The FCA highlights proactive engagement, including a 2024 letter to CEOs and follow-up with 300 firms in late 2025, signaling intensified supervision without altering the registration-only regime under the Financial Services and Markets Act.

Key dates

25 February 2026

- MFS entered administration

20 March 2026

- FCA enforcement investigation opened (current date context)

No specific deadline provided Deadline

for investigation completion or enforcement action

Suggested considerations

• *For MFS and its Administrators:
• Cooperate fully with the FCA enforcement investigation
• Preserve all documentation related to AML/CTF compliance, customer due diligence, and transaction monitoring
• Provide access to bank accounts, transaction records, and compliance files to investigators
• Respond to FCA information requests within specified timeframes

What changed

• The FCA's enforcement investigation does not introduce new regulatory requirements but rather represents the regulator's response to alleged breaches of existing obligations.
• Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017: MFS's primary regulatory obligation as an Annex 1 registered firm.

Key dates

Before end of 2026

- Consumers expected to begin receiving compensation under motor finance scheme

End of March 2026

- FCA expected to publish final rules and guidance for motor finance redress scheme, confirming scope, calculation methodologies, and timescales

31 May 2026 Deadline

- Complaints pause lifts for DCA-related motor finance complaints; standard 8-week response deadline resumes

Mid

2026 onwards; - Motor finance compensation payments anticipated to commence

Suggested considerations

• *Immediate Operational Priorities (Pre-May 2026):
• *Governance and Accountability
• Appoint senior managers with explicit accountability for complaints handling and redress programmes
• Establish board-level oversight structures with regular reporting on complaints volumes, redress calculations, and regulatory compliance
• Document decision-making frameworks for complaint eligibility and dismissal grounds

What changed

The redress system modernization introduces several structural and procedural reforms: Registration Stage for Complaints A new formal registration stage has been introduced to standardize how complaints enter the system, improving tracking and early identification of systemic issues across firms and markets. Updated Dismissal Grounds The FCA has revised the criteria for dismissing complaints, providing clearer standards that should reduce disputes about complaint admissibility and improve consistency in decision-making. Enhanced Fair and Reasonable Test Guidance Clearer guidance on how the...

Key dates

Early 2026

– Scheme implementation begins (exact date dependent on final rules publication)

Late March 2026

– FCA to publish final scheme rules (timing to be confirmed in advance, outside market hours)

31 May 2026 Deadline

– Motor finance complaints handling pause lifts; firms must be ready to respond to complaints outside the scheme

11 April 2031 Deadline

– Record retention deadline for all relevant scheme documentation

Three months from scheme launch

– Standard implementation period for lenders to contact prior complainants and provide compensation notifications

Suggested considerations

• *Immediate Priorities (Q1 2026):
• *Data Integrity Assessment: Conduct comprehensive audit of historic motor finance agreements to identify eligible customers and validate transactional data completeness, particularly for older agreements.
• *Redress Calculator Development: Build auditable, validated redress calculators capable of:
• Repricing loans based on proposed APR reductions
• Calculating compensatory interest at BoE base rate + 1%

What changed

• The FCA's streamlined approach introduces several material modifications to the original compensation scheme proposal: Process Streamlining
• Automatic opt-in for prior complainants: Customers who complained before scheme launch will no longer be asked to opt out.
• Immediate acceptance of offers: Consumers can accept redress offers immediately rather than waiting for final determinations.
• Flexible communication channels: Firms are no longer required to use recorded delivery; alternative channels with fraud safeguards are permitted. Implementation Timeline
• Three-month standard implementation period from scheme launch, with up to five months for older agreements to allow adequate data review and calculation accuracy.

Key dates

24 October 2025 Deadline

- Consultation response deadline for CP13/25

20 February 2026

- Publication date of PS5/26 (final policy)

~20 August 2026 Deadline

- Implementation deadline for SS2/23 CUSO expectations (six months from PS5/26 publication)

Suggested considerations

• Review and update policies: Credit unions must conduct due diligence/risk assessments before any CUSO investment/use; implement conflict of interest policies, especially for non-credit union partnerships.
• Ensure structural safeguards: Limit liability to investment amount; maintain legal/operational separation between credit union and CUSO; monitor aggregate investments ≤7.5% of capital.
• Governance alignment: Decisions must prioritize member benefits per legislative objects; update internal investment rules to comply with amended PRA Rulebook (Credit Unions Part).
• Implementation planning: Within six months, integrate SS2/23 expectations into operations; non-engaging credit unions need no action but should monitor for opportunities.
• Reporting/oversight: Prepare for PRA supervision on CUSO risks; consider CBA updates if significantly impacting mutuals.

What changed

• - Investment permission and cap increase: Credit unions can now invest in CUSOs using own capital, with the cap raised from 5% to 7.5% of total capital across all CUSOs (clarifications added on...
• Expanded CUSO scope: CUSOs can now serve other UK-regulated mutuals (with Part 4A permission) beyond just credit unions; partnerships with non-credit unions permitted as owners, subject to safeguards.
• Supervisory expectations in SS2/23: New chapter requires due diligence, risk analysis, limited liability to investment amount, legal/operational separation, conflict of interest policies, and...
• Other updates: Chapter 17 of SS2/23 amended due to deletion of SS20/15; six-month implementation window for SS2/23 CUSO expectations.

Suggested considerations

• Review and update policies: Building societies must confirm internal treasury/lending frameworks align with remaining requirements (e.g., PRA Rulebook, Building Societies Act 1986, ICAAP/SREP under amended SS31/15); remove any SS20/15-specific references or processes.
• Assess risk management: Evaluate use of derivatives or treasury tools for compliance with non-prescriptive expectations; ensure SMCR accountability and board oversight.
• Update governance documents: Revise ICAAP/SREP processes per SS31/15 amendments; document rationale for tailored approaches to demonstrate proportionality.
• Engage supervisors: No immediate reporting mandated, but proactive dialogue recommended for firms previously on extensions or complex approaches.
• Monitor related reforms: Track Strong and Simple framework (e.g., PS4/26, PS20/25) for SDDT capital/liquidity simplifications referencing this change.

What changed

• - Full deletion of SS20/15: Removes all expectations on treasury and lending activities, including the "Treasury Approaches" framework, without replacement.
• Consequential amendments: Updates SS31/15 (Internal Capital Adequacy Assessment Process and Supervisory Review and Evaluation Process) to excise references to SS20/15.
• Alignment with broader policy: Addresses inconsistencies with PRA's approach for banks, improved sector risk management maturity, and proportionality for smaller firms; supports objectives of safety,...
• No new rules imposed: PRA deems existing tools sufficient, including Building Societies Act 1986 restrictions, PRA Rulebook, SMCR, and supervision; derivatives permitted only for risk management...

Key dates

5 March 2025

- PRA publishes Consultation Paper CP2/25 proposing £70 billion threshold

5 June 2025 Deadline

- Consultation response deadline

12 November 2025

- PRA issues PS22/25 with final policy

1 January 2026

- Final policy takes effect, applying new £75 billion threshold and three-year averaging

30 June 2026

- Cessation of modifications by consent disapplying leverage ratio rules

Suggested considerations

• Review and update internal retail deposits calculations to incorporate three-year moving average methodology starting 1 January 2026.
• Assess current and projected retail deposits against £75 billion threshold (and £10 billion non-UK assets) to determine leverage ratio applicability and adjust capital planning accordingly.
• Prepare to meet 3.25% leverage ratio minimum plus buffers if thresholds breached, including systems updates for averaging and reporting.
• For firms with modifications by consent: Plan transition back to full leverage ratio rules by 30 June 2026, including any necessary capital raises or disclosures.
• Update governance, risk models, and board reporting to reflect changes; conduct gap analysis against PRA Rulebook appendices in PS22/25.

What changed

• - Retail deposits threshold raised from £50 billion to £75 billion, adjusted upward from the CP2/25 proposal of £70 billion to account for further GDP growth to Q2 2025 (rounded to nearest £5...
• Introduction of a three-year moving average for calculating retail deposits metric, replacing point-in-time values to mitigate volatility and aid capital planning, particularly for building societies.
• Non-UK assets threshold remains unchanged at £10 billion.
• Modifications by consent disapplying leverage ratio rules during review will cease on 30 June 2026. These changes are implemented via updates to the Leverage Ratio – Capital Requirements and Buffers...