Navigating Consumer Credit in 2026: Are You Ready?

Looking ahead to 2026 for the UK consumer credit market

By Simon Brown | Advisory Engagement Lead

As another Christmas is over and the New Year fireworks fade it’s time to look forward to what the coming months have in store. Last year was a year of significant regulatory movement in UK consumer credit and 2026 looks set to be even more consequential. Firms face a confluence of reforms spanning the Consumer Credit Act (CCA) modernisation, industry‑wide motor finance redress, the continued embedding of the Consumer Duty, changes to complaint‑handling rules, BNPL coming into the perimeter, strengthened forbearance standards, and foundational work to overhaul credit information governance. Here’s what matters—and how to get ready.

1) CCA reform moves from principle to build

HM Treasury’s Phase 1 consultation on reforming the Consumer Credit Act 1974 signals a clear direction: migrate prescriptive CCA provisions (notably information requirements, sanctions and criminal offences) into a more agile, FCA‑rulebook model, with Phase 2 to cover scope and statutory rights. The Phase 1 paper (May 2025) set out proposals to repeal and recast large tranches of disclosure and servicing requirements into FCA rules, with primary and secondary legislation and transitional periods to follow.

What this means for 2026: Even before final legislation lands, firms can expect FCA consultations on the rulebook to follow the Treasury’s direction of travel. Expect simplification of rigid technicalities (e.g., small/modifying/multiple agreements) and alignment with Consumer Duty outcomes, while retaining certain protections in law. Programme‑level mobilisation and horizon scanning of the future FCA rule set will be critical in 2026.

2) Motor finance: complaint handling extensions and a potential redress scheme

After the Court of Appeal’s October 2024 ruling on commission disclosure and the subsequent pause extensions for complaint handling, the FCA in October 2025 consulted on an industry‑wide motor finance redress scheme (CP25/27). In December 2025 it also confirmed PS25/18, extending special complaint‑handling timelines, including the requirement to start issuing final responses for leasing complaints by 5 December 2025 and extending the pause for other commission complaints to 31 May 2026 while the FCA finalises its redress decision

The consultation points to potential coverage of agreements from 6 April 2007 to 1 November 2024, with lender‑led identification and compensation, and estimated industry costs in the multi‑billion range (compensation plus implementation). Timelines in the consultation foresee final rules in February/March 2026.

What this means for 2026: Firms should prepare for a large-scale, data‑intensive remediation. That includes data discovery across legacy systems, reproducible liability assessments, fair and consistent redress calculations, surge‑ready ops, conduct risk controls for CMC activity, and robust MI to evidence Consumer Duty outcomes.

3) Consumer Duty: from implementation to evidenced outcomes

The Duty remains a centrepiece of FCA supervision. 2025 portfolio communications signal a multi‑year focus on embedding outcomes, including consumer understanding, price & value, distribution chain roles, and operational/cyber resilience—especially for firms integral to lending decisions such as CRAs and credit information service providers. Expect further testing of MI, governance and remedial actions through 2026.

What this means for 2026: Boards should anticipate deeper supervisory sampling of real customer journeys (support, disclosure, vulnerability handling) and robust value assessments—and be ready to demonstrate closed‑loop improvements grounded in data.

4) Complaint‑handling: targeted DISP changes and reporting reform

Beyond motor finance-specific DISP changes, the FCA in 2025 consulted on simplifying complaints reporting (CP25/13) by consolidating overlapping returns and standardising categories and frequency, with a policy statement slated thereafter and an expected ~12‑month implementation runway. Meanwhile, FOS award limits uprated from 1 April 2025 (£200k pre‑2019 acts; £445k post‑2019) keep the exposure environment dynamic.

What this means for 2026: Plan for systems and process updates to the complaints data model, staff training on revised categories, and MI realignment, while continuing to manage extended motor‑finance timelines under PS25/18.

5) BNPL: entering the perimeter by mid‑2026

The government confirmed its final position and laid draft legislation to bring third‑party BNPL into regulation, with a temporary permissions regime and a 12‑month FCA rulemaking window once the statutory instrument is made. The working assumption across official and legal commentary is application from around mid‑2026. Expect tailored FCA rules on disclosure and creditworthiness for BNPL, access to FOS and Section 75 protections, and a general exemption from broking permissions for most merchants (with limited exceptions).

What this means for 2026: BNPL lenders should ready perimeter assessments, authorisation strategies (or TPR onboarding), CDD/Creditworthiness models, product disclosure journeys aligned to Duty, and dispute handling/merchant arrangements, especially where omni‑channel experiences blur boundaries.

6) Strengthened forbearance rules now in the Handbook

From 4 November 2024, the FCA embedded many elements of the pandemic Tailored Support Guidance into CONC/MCOB, with enhanced requirements to support customers in or at risk of financial difficulty (early engagement, transparency on options, appropriateness checks, vulnerability considerations, and ongoing review). These are now “business as usual” standards to evidence in 2026.

What this means for 2026: Expect supervisory scrutiny of arrears strategies, fees/charges practices, outbound engagement quality, and how firms assess and evidence the appropriateness of forbearance over time.

7) Credit information market: governance and data quality reforms

The FCA’s Credit Information Market Study (Final Report) is transitioning to implementation via a new Credit Reporting Governance Body (CRGB) to drive data quality, consistency, consumer access/engagement and pro‑competitive remedies. The FCA has supported IWG recommendations and expects industry to assume full responsibility for the CRGB following FCA‑funded transition. Rulemaking on mandatory data sharing is on the horizon.

What this means for 2026: Lenders should anticipate data‑sharing standards uplift (defaults, forbearance, debt solutions), CRGB rules, and downstream impacts on affordability modelling and adverse‑data governance, key for Duty price & value assessments.

8) APP scam reimbursement: operational reality beds in

The mandatory reimbursement regime for APP fraud (Faster Payments and CHAPS) went live 7 October 2024. The PSR’s 2025 consolidated guidance reconfirms mechanics: a £100 excess (not for vulnerable customers), a £415k cap, and 50:50 liability split between sending and receiving PSPs, with continuing clarifications and effectiveness review. Although principally payments regulation, the operational burden is material for consumer‑facing lenders with current‑account or payments propositions.

What this means for 2026: Sustain cross‑firm fraud controls, data‑sharing, MI and customer communications that align with Duty outcomes and ensure complaint and redress interfaces are robust.

9) Data protection reform: keep watching the legislative track

Following the 2024 election, the government introduced the Data (Use and Access) Bill as a successor to the lapsed DPDI Bill. Commentary in 2025 indicates near‑final approval, with changes that refine rather than radically rewrite UK GDPR, yet still requiring firms to revisit direct marketing, governance and automated‑decisioning practices once enacted.

What this means for 2026: Expect a compliance refresh across marketing, transparency and internal governance, coordinated with Consumer Duty data‑to‑evidence frameworks. (Be mindful of public commentary that the earlier DPDI Bill failed in 2024; track the current Bill’s final scope and commencement dates.)

Five practical priorities for Boards and Execs in 2026

1. Consumer Duty evidence base: Strengthen end‑to‑end customer journey testing (understanding, support, vulnerability), value assessment narratives, and outcome MI, especially in arrears/forbearance journeys and where CMC activity is significant.
2. Complaints operating model: Update DISP processes for PS25/18 timelines and prepare for consolidated complaints reporting (taxonomy, systems, governance), while monitoring FOS exposure given uprated award limits.
3. Credit information and fraud ecosystems: Engage early with CRGB developments and mandatory data‑sharing proposals; continue to embed APP reimbursement controls, MI and governance.
4. Redress readiness (motor finance): Stand‑up cross‑functional programmes covering data discovery, eligibility logic, liability assessment tooling, redress calculators, quality assurance, complaints integration, customer comms, and resourcing models. Build MI that evidences fair, consistent outcomes.
5. BNPL perimeter and rulebook change: Map product sets, flows and merchant models to the forthcoming regime; prepare authorisation/TPR pathways, creditworthiness pipelines and disclosures tailored to the FCA’s framework.

How Huntswood Can Help

Huntswood’s regulatory experts combine deep advisory capability with operational delivery at scale, enabling firms to navigate complex change and surge events confidently. Beyond motor finance redress, Huntswood offers a comprehensive suite of services designed to help firms meet regulatory expectations and deliver good customer outcomes.

• Our Regulatory Advisory and Assurance services provide strategic insight and practical support. We help firms interpret upcoming changes such as CCA reform, BNPL regulation, and Consumer Duty developments. Our team conducts detailed risk reviews, assesses governance frameworks under SMCR, and evaluates Board effectiveness. Where required, we also deliver Skilled Person (s166) reviews and compliance health checks to ensure firms remain aligned with regulatory standards.
• For firms preparing for BNPL regulation, Huntswood offers tailored readiness programmes. We analyse gaps against emerging FCA requirements and design frameworks for affordability, vulnerability, and complaint handling. We also advise on merchant governance and distribution oversight, ensuring firms can confidently operate within the new perimeter.
• Complaints handling remains a critical area of focus, and Huntswood brings deep expertise in transforming complaints operations. We undertake comprehensive reviews to align processes with DISP rules and Consumer Duty principles, while our outsourced solutions provide surge capacity and fully managed operations. Through root-cause analysis and MI enhancements, we help firms turn complaints data into actionable insights that improve customer experience and reduce regulatory risk.
• In collections and forbearance, Huntswood supports the design and implementation of strategies that meet strengthened CONC and MCOB standards. We integrate vulnerability considerations into every stage of the process and deliver training to ensure staff can provide empathetic and compliant support to customers in financial difficulty.
• Financial crime and fraud prevention are increasingly important, particularly with APP reimbursement rules now in force. Huntswood helps firms build robust frameworks for fraud prevention and compliance, including AML, sanctions screening, and transaction monitoring. Our operational teams can step in to clear backlogs and embed effective controls quickly and efficiently.
• Governance and operational outsourcing are core strengths of Huntswood. We provide Board-level reviews and SMCR alignment, alongside managed services for customer operations such as contact centres and back-office support. This allows firms to maintain resilience and scalability while meeting regulatory expectations.
• Huntswood delivers data and MI solutions that underpin effective decision-making. We help firms prepare for credit information governance changes and build dashboards that evidence Consumer Duty outcomes and support regulatory reporting.
• We also recognise that training is fundamental to embedding compliance and good outcomes. Huntswood supports firms with tailored programmes ranging from Board-level SMCR training to front-line regulatory training. Our experts design and implement training that equips senior leaders with governance responsibilities and ensures customer-facing teams understand and apply regulatory requirements in their day-to-day roles

The bottom line

2026 will reward firms that treat regulatory change as an opportunity to simplify, digitise and prove good outcomes, across origination, servicing, collections and remediation. With the right operating model, data, and controls, you can not only meet the regulator’s expectations but also build durable commercial advantage.

If you’d like a short, practical readiness assessment tailored to your portfolio, or to discuss how Huntswood can help you deliver at pace and scale, drop me a message.