The developments in this section focus on how firms treat customers, manage misconduct and respond when harm occurs. BNPL regulation introduces immediate requirements for deferred payment credit providers, while the FCA’s non-financial misconduct rules strengthen expectations around conduct and fitness and propriety. Proposed reforms to the redress system may also change how firms identify systemic issues, notify regulators and provide proactive redress.
Developments covered
🟥 Urgent / significant impact
Regulating buy now pay later (BNPL)
PS26/1 brings previously unregulated buy now pay later products into scope, introducing new requirements for deferred payment credit (DPC) lenders.
The regime is now in force. Third-party lenders offering deferred payment credit (DPC) agreements must be authorised for the relevant consumer credit activities or hold temporary permission, and comply with the FCA’s rules. These include proportionate creditworthiness assessments, key product information at the point of sale, support for customers in financial difficulty, and requirements under the Consumer Credit Sourcebook (CONC), including complaints handling and access to the Financial Ombudsman Service. Merchants acting solely as brokers remain exempt, and agreements entered into before 15 July 2026 remain outside the regime.
Key dates
- 15 July 2026: DPC regime came into force
Legal issue/risk
Firms entering into new DPC agreements without the necessary FCA authorisation, or without having secured temporary permission before the regime commenced, risk enforcement action and criminal liability. Firms that did not obtain temporary permission may continue servicing pre-existing exempt agreements, but cannot enter into new regulated DPC agreements until authorised.
Next steps
- Confirm that the firm holds the appropriate FCA authorisation or temporary permission before entering into new DPC agreements.
- Review creditworthiness, customer communications, complaints handling and forbearance processes against the FCA’s requirements.
- Ensure ongoing compliance with CONC requirements, including product disclosures, complaints handling and regulatory reporting where applicable.
🟥 Urgent / significant impact
PS25/23 Tackling non-financial misconduct in financial services
The FCA has finalised guidance on non-financial misconduct, updating the Code of Conduct (COCON) and clarifying how misconduct should be assessed under the Fit and Proper (FIT) framework.
The policy statement clarifies how firms should identify, investigate and respond to non-financial misconduct, including behaviour that may affect workplace culture, consumer outcomes or market integrity. While the reforms do not create new employment law obligations, they provide greater certainty on when misconduct falls within the FCA’s conduct rules and how it should be taken into account when assessing whether individuals remain fit and proper.
The FCA has largely confirmed the approach consulted on, emphasising that firms should exercise proportionate judgement while applying the revised expectations consistently.
Key dates
- 1 September 2026: New COCON rules take effect
Legal issue/risk
The revised rules increase regulatory expectations for how firms identify, investigate and assess non-financial misconduct. Firms with inadequate governance or inconsistent decision-making may face increased regulatory scrutiny.
Next steps
- Review conduct, HR and disciplinary policies against the updated COCON and FIT guidance.
- Train managers, HR and compliance teams on the revised expectations.
- Ensure governance and record-keeping support consistent fitness and propriety assessments.
🟧 Important, uncertain timing/impact
Expected policy statement on modernising the redress system
Following a consultation paper in May, the FCA and the Financial Ombudsman is expected to publish a policy statement in late 2026
Following consultation, the proposals aim to improve the consistency and effectiveness of the UK’s redress framework by encouraging earlier identification of consumer harm, clearer expectations for proactive redress, and closer coordination between the FCA and the Financial Ombudsman Service. They also propose changes to complaint handling, notification of systemic issues, the operation of the Financial Ombudsman and FSCS, and the way complaints are assessed, with the aim of delivering faster, more predictable outcomes for firms and consumers.
Key dates
- 2026: FCA and Financial Ombudsman policy statement expected
Potential impact
The proposals could increase regulatory expectations around identifying systemic issues, notifying the FCA and providing proactive redress. Firms may need to review their complaint-handling and governance arrangements to ensure they can respond effectively once the final policy is published.
Next steps
- Review the consultation proposals and assess the potential impact on complaints handling and redress processes.
- Consider whether governance and SUP 15 notification procedures would need updating.
- Monitor publication of the final policy statement and plan implementation where required.