Welcome to the July 2026 Edition of our Consumer Finance & Insurance Newsletter.
July was an exciting month inside and outside of regulation with World Cup, Wimbledon and the British Grand Prix dominating sport headlines, a change in Prime Minister as well as the introduction of regulation to Deferred Payment Credit (DPC). The motor finance redress challenges are continuing to delay the completion of the redress scheme.
Affecting all sectors the FCA have published their fee increases for 2026-7. The FCA’s annual funding requirement for 2026-27 has increased by 0.7%. Further details can be found through the following link FCA fee rate movement 2026/27 | FCA.
Also affecting all sectors the FCA issued an update on Consumer Duty, which includes a review of Products and Services, updated good practice insights, supervising the Consumer Duty, and Consumer Duty consultations. The FCA Newsletter can be viewed via Consumer Duty update. This is a timely update given that for many firms July marks the anniversary of the Duty and many firms will need to submit their annual reports for sign off by their Boards.
In relation to Consumer Duty in all sectors, Director of Cross-cutting policy and Strategy, Charlotte Clark published a Blog on 27th July 2026 specifically on ‘Why understanding the customer experience matters and where firms should focus’. This looks at what good practive looks like in relation to outcomes monitoring, building frameworks that drive better outcomes, using data to strengthen and support, approach to third parties and making governance count. Outcomes monitoring: why understanding the consumer experience matters and where firms should focus | FCA.
The FCA have also published Outcomes Monitoring: Good Practice and areas for improvement Outcomes monitoring: good practice and areas for improvement | FCA
In this edition, we explore the key regulatory developments and supervisory themes affecting Consumer Credit, Insurance Intermediary and Claims Management firms across the UK in July, as well as stories that affect all sectors.
If you would like to discuss how these developments may impact your business or regulatory strategy for the year ahead, our team would be pleased to support you.
Use the yellow dropdown arrow to expand and view more information for the section you’re interested in.
CONSUMER CREDIT.
Buy Now Pay Later Rules in Force
On 15th July 2026, new rules have come into force that are intended to deliver on a commitment the Government made to end the Buy-Now, Pay-Later ‘Wild-West’. Buy-Now, Pay-Later products (BNPL) provided by 3rd party lenders are now regulated by the Financial Conduct Authority (FCA), giving consumers protections in line with other forms of credit.
The regulation is to be made consistent to align with other credit products, to benefit consumers to ensure it is always used responsibly, protecting the millions of people who use it whilst ensuring checks are quick and seamless, so responsible BNPL users shouldn’t face any added friction or delays. In total only 14 firms were accepted into the temporary permissions regime as the rules do not stretch to BNPL agreements provided by the provider of the goods and services.
Nor do retailers need to be authorised for credit broking of DPC agreements. Under the new rules, providers must carry out affordability checks before offering credit, meaning no one should be borrowing what they cannot realistically afford to repay, helping people avoid getting into avoidable, unaffordable debt.
Consumers seeking a refund for faulty goods will now have clear, enforceable rights to claim one and anyone who falls into financial difficulty will be directed towards debt advice and support first, rather than being immediately handed to a debt collector.The article can be found here: Regulating Buy Now Pay Later (BNPL) | FCA
Motor Finance Redress Scheme Legal Challenge
As stated last month, the FCA have received legal challenges to their motor finance compensation scheme. The FCA have stated their priorities remain to secure fair compensation for consumers as quickly as possible and ensure a healthy motor finance market.
The FCA welcome the commitment of most lenders to implement the scheme and will defend it robustly. The FCA are engaging with the Tribunal and those who have challenged the scheme on the possibility of suspending some elements while continuing with preparatory work. Firms should continue to prepare for the scheme until the FCA communicate otherwise. PS26/3: Motor finance consumer redress scheme | FCA
The lawfulness of the Scheme is being challenged by: CA Auto Finance UK Limited (CAAF); Consumer Voice Limited (CV); Mercedes-Benz Financial Services UK Limited (MB); and Volkswagen Financial Services (UK) Limited (VW), pursuant to s.404D(1) of FSMA. The Upper Tribunal (Tax and Chancery Chamber) has jurisdiction to hear the case. In the Update, the FCA published certain key documents in the case and the directions of the Tribunal made on or after 30 June 2026. The documents can be seen at: Motor finance scheme: legal challenge documents | FCA
The directions order of 1 July 2026 (among other things) requires any person who wishes to be added as an Interested Party to the proceedings to make an application within 28 days of the date the order is published on our website, i.e. by 11.59pm on 4 August 2026. The order contains further details on the required form and substance of any application.
Why getting product design right really matters to consumers
On 10th July 2026, Charlotte Clark, Director of cross-cutting policy and strategy gave a speech outlining why product design matters to consumers. The article outlines what the FCA found in its review of how firms are designing, monitoring and distributing products and services under the Consumer Duty.
When firms have consumers’ needs firmly in mind, they can support good outcomes – helping people make informed choices, get fair value, and receive the support they need over time to navigate their financial lives.
But when product design falls short, the consequences can be serious. Firms might sell products to the wrong people, deliver poor value, or fail to adapt when customers’ circumstances change. And if they don’t monitor how their products are working in practice, they leave consumers exposed to avoidable harm – particularly people in vulnerable circumstances.
That’s why the FCA reviewed how firms are designing, monitoring and distributing products and services under the Consumer Duty. The focus was on the foundations that matter most:
- Getting product design right from the outset.
- Keeping products under review.
- Taking responsibility for outcomes where products are sold or distributed by third parties.
The speech can be seen at: Why getting product design right really matters to consumers | FCA
MORTGAGES.
Mortgage Charter Uptake Data - June 2026
On 29th June 2026 the FCA published data from firms who have signed up to the Governments Mortgage Charter, introduced in June 2023.
The latest published information can be found through the following link : Mortgage Charter uptake data - June 2026 | FCA
INSURANCE.
Managing Conflicts of Interest in Insurance
Blog dated 23rd July 2026 from Chris Knight, Director of Insurance outlining FCA expectations for firms on vertically integrated insurance. Having a conflict of interest doesn't automatically make a business model unacceptable. But firms need to take these risks seriously. The FCA have written directly to some firms where they think their business models may be creating heightened risks of conflicts of interest.
They are also making their expectations clear to the whole market. More details on the blog can be found on the FCA’s website Managing conflicts of interest in insurance | FCA
CP26/22 Simplifying the Insurance Rules
The FCA are setting out further proposals for simplifying insurance and funeral plan requirements while maintaining appropriate consumer protection. These are part of wider plans to streamline rules and reduce complexity for firms, and follow final rules published in December 2025.
Alongside this consultation, the FCA are consulting on the application of the Consumer Duty to business with non-UK customers. This has been done by taking a consistent approach to disapplying ICOBS and PROD 4 with disapplying the Duty. The FCA are asking for comments on this Consultation Paper (CP) by 4 September 2026.
The CP can be found here: CP26/22: Simplifying the insurance rules | FCA
CLAIMS MANAGEMENT.
Joint taskforce continues crackdown on misleading car finance claims adverts
The FCA, Advertising Standards Authority, Solicitors Regulation Authority and Information Commissioner's Office are tackling the poor handling of motor finance claims by some claims management companies (CMC’s) and law firms. The article can be found here: Joint taskforce continues crack down on misleading car finance claims adverts | FCAAs part of the joint taskforce's continued crackdown, in June the FCA had 170 misleading car finance claims adverts removed or amended by claims management companies (CMCs), bringing the total up to 1,200 since January 2024.
As part of this work, the FCA also issued 8 alerts in June against unauthorised firms promoting regulated claims management activities without the necessary authorisation.
Alongside this, the Advertising Standards Authority (ASA) has launched investigations into various motor finance claims ads placed by law firms. It is scrutinising a range of issues including clarity around fees, the ability to claim for free via other routes, potentially exaggerated compensation amounts and consumers being potentially misled by 'free checker' tools.
Joint taskforce members are continuing to take action against misconduct by CMCs and law firms that goes beyond misleading adverts. This could lead to further action against firms.
You don't need to pay to claim: FCA launches Nationwide Car Finance Campaign
Millions of car finance customers who may be owed compensation can get help making a complaint for free. The FCA launches a national advertising campaign. You don't need to pay to claim: FCA launches nationwide car finance campaign | FCA
MS26/2 Claims Management Services Market Study Terms of Reference
The FCA are launching a market study to gather evidence to understand the root causes of practices that have been observed by firms in the claims management market and how they impact competition and consumer outcomes.
This includes practices that have been observed by FCA-regulated claims management companies (CMCs) and lead generators, as well as legal professionals regulated by the Solicitors Regulation Authority (SRA) and other legal regulators. The FCA will be working closely with the SRA as it carries out the market study.
The study will inform whether interventions are needed to promote effective competition, support customer choice, and ensure the claims management services market serves consumers in the way that is expected. The work will focus on claims management services provided in relation to financial services and financial products claims and housing disrepair claims.
Before any evidence is gathered, the FCA want views on whether the correct scope and focus areas have been identified. The focus areas are:
- Consumer journey
- Pricing-related harms
- Business model incentives
-Risks created by low financial resilience in CMCs
- Incentives created by the regulatory landscape.
The article can be read here: MS26/2: Claims management services: market study terms of reference | FCA
OTHER STORIES, FOR INFORMATION.
Reporting complaints - Upcoming changes on how to report complaints
From 1 January 2027, there will be a single, unified complaints return to replace 5 of the existing complaints returns: (DISP 1 Annex 1, Consumer Credit Return (CCR) Funeral Plans (FP) Claims Management Companies (CMCs) Electronic Money and Payment Services Return (PSR)).
Who this applies to
FCA-authorised firms subject to DISP rules, including:
- banks and building societies
- insurance firms (life and general insurers)
- investment firms
- mortgage lenders and intermediaries
- retail financial services providers (eg pensions, retail investment firms)
- consumer credit firms
- payment services and e-money firms
- complaint management companies
- funeral plan providers
Key reporting changes for affected firms:
- Reporting will be on a fixed 6-month and calendar-year basis, with the first reporting period being 1 January 2027 to 30 June 2027.
- Based on permissions, you will only need to complete the sections of the new return relevant to your regulated activities.
- The option to report nil complaints will be provided upfront.
- Group reporting has been removed. Reporting will be at individual legal entity level.
- Revised taxonomy, reflecting modern products and services. Reducing reliance on reporting against 'Other'.
- Reporting vulnerable customer data for 2 specific data points:
- Where you identify a customer is in vulnerable circumstances, regardless of how this was disclosed.
- All complaints relating to or caused by your failure to consider or respond to a customer’s vulnerability.
- Contextualised complaints data will be required for retail banking, insurance, payment services and CMC firms only.
Further information can be found : www.fca.org.uk/firms/regulatory-reporting/reporting-complaints
FCA cracks down on 'Fin-Fluencers', illegal promotions and market abuse
The FCA led an international crackdown on illegal finfluencer promotions – resulting in 3 arrests and 650 social media takedown requests. It also secured a combined 11 years in prison for 2 cases of insider dealing in the first year of its 5-year strategy, according to its Annual report and accounts published today.
The FCA has focused its efforts on the most serious risks and harms. It has taken decisive action to protect consumers, fight financial crime and uphold market integrity, delivering an estimated £5.6bn in benefits to consumers, firms and the wider economy.
The article can be found here: FCA cracks down on illegal promotions and market abuse in first year of new strategy | FCA
If you need help and advise to ensure your financial promotions are ‘clear, fair and not misleading’, you can contact Cosegic at [email protected]
FCA decides to ban father and son following fraud and misuse of Client money
The FCA has decided to ban a father and son from UK financial services after the High Court found that they had engaged in fraud and misused client money.
The father and son misused client money to fund a firm’s business expenses. When they later wanted to sell the firm, the pair made the business appear more financially attractive by creating false financial records to mislead the buyer, as well as their own accountants and auditors. They concealed the misuse of client money and overstated the firm’s financial position, leaving the firm burdened with a significant client money deficit.
FCA publishes the Mills Review into the impact of AI on Financial Services
Led by FCA executive director Sheldon Mills and commissioned by the Board, The Mills Review is the first work of its kind initiated by a regulator globally.
Drawing on views from across the financial services landscape, the report identifies 4 major AI‑driven shifts likely to impact retail financial services: the transformation of firm operations; the evolution of consumer journeys; the reshaping of competition and market power; and the amplification of fraud and cyber risks.
The report finds there is already consumer appetite for the use of agentic AI in personal finance, with research commissioned by the FCA showing that a fifth of people – equivalent to 11 million UK adults – are likely to use AI that can act autonomously within pre-set goals. But consumers in the survey are concerned about trust and control of AI.
The Review concludes that AI is likely to become a defining force in retail financial services, transforming how firms operate, how consumers make financial decisions and how markets function. While AI has the potential to improve access, personalisation and efficiency, it could also amplify risks associated with fraud, cyber security, consumer harm and market concentration.
Details of the review can be found at: FCA publishes landmark review into impact of AI on retail financial services | FCA and details of the Mills Review can be found at: AI and the future of retail financial services (The Mills Review) | FCA
