Setting the scene

Consumer credit is a pillar of the UK financial system – woven into daily life. According to the FCA’s latest Financial Lives survey, 84% of adults hold at least one credit or loan product. Yet much of this borrowing isn’t aspirational, it’s survival: around 5% of consumers remain in persistent credit card debt and 21% have been overdrawn.

Over the last decade, regulators have worked hard to raise standards: introducing a price cap on high-cost credit, enhancing borrower support, and embedding the Consumer Duty. Those measures have driven harmful practices out of the market, but they also highlight the delicate balance between protecting customers and ensuring access. The next decade will look very different. With digital lending accelerating and Buy Now Pay Later (BNPL) regulation looming, compliance leaders need to pause, reassess and adapt their frameworks.

 

Lessons from recent data

The FCA’s reflections on consumer credit evolution highlight that compliance responsibilities are widening under the Consumer Duty. Credit is not always the right answer: many customers require budgeting support, benefits access or referral to debt advice, and firms are expected to build those signposting options directly into their journeys.

Real-world examples show how this is already happening. In 2024, community lender Moneyline partnered with fintech Inbest.ai to develop a signposting toolkit for declined applicants, directing them towards debt advice, income maximisation and social tariffs. This demonstrates how collaboration can deliver better outcomes under the Duty.

Technology also has a regulatory dimension. The FCA expects digital journeys to do more than sell – they must identify vulnerability and prevent foreseeable harm.  Online journeys that skip key cost disclosures or remove natural pause points risk breaching Consumer Duty standards. Instead, lenders are expected to embed “positive friction” safeguards such as prompts, pauses or acknowledgement boxes – to give consumers time to reflect before committing to credit.

Ask yourself: would your current online journey stand up if the FCA asked you to evidence how you test for vulnerability?

 

What the next decade holds

The FCA points to three priorities shaping the future:

Innovation that adds value

  • Products must be transparent, useful, and clearly meet consumer needs.
  • Open banking and AI can personalise decisions – but must avoid embedding bias.
  • Plain language and explainer tools should improve consumer understanding.

Compassionate support for vulnerable customers

  • Firms should build positive friction (pauses, declarations) into journeys.
  • Staff need to spot distress and offer alternatives like payment breaks or referrals.
  • Non-digital access remains critical for the 2% of adults still digitally excluded.
  • The FCA will expect firms to evidence how vulnerability policies are applied in practice, not just documented on paper.

Ensuring access to the right credit

  • BNPL regulation is coming: consultation runs until September 2025, with rules due in early 2026, and a regulation day on 15 July 2026.
  • Consumer Credit Act reform will replace rigid rules with outcomes-based requirements, shifting emphasis to monitoring, governance, and evidencing fair outcomes.

 

What compliance leaders should do now

  1. Product governance: Review product design and digital journeys under the Consumer Duty lens, ensuring terms are transparent, risks are clear, and “positive friction” (pauses, prompts, confirmations) is embedded to protect customers. In practice: test your online journey end-to-end and ask if a regulator would view it as fair and balanced.
  2. BNPL readiness: Map the impact of BNPL regulation due in 2026, including permissions, authorisation changes, and policy updates, so your firm is prepared ahead of regulation day. Would your affordability checks withstand scrutiny if applied to BNPL customers tomorrow?
  3. Vulnerability frameworks: Strengthen policies and training to help staff identify vulnerable customers, respond with tailored support, and integrate signposting to debt advice and external resources. The FCA has made clear that “paper policies” aren’t enough – firms must show how these frameworks operate on a day-to-day basis.
  4. Data and monitoring: Use open banking and real-time analytics to track borrower behaviour, detect early signs of harm, and intervene before issues escalate. This is not only good practice but a way to demonstrate proactive harm prevention under the Duty.

 

Final thoughts

The FCA’s direction is clear: the next decade is about better outcomes, not just tighter rules. Innovation must be purposeful, support must be compassionate, and access must remain fair.

 

At fscom, we help firms anticipate these shifts – from BNPL authorisation planning to compliance maturity assessments. If you would like to discuss how your frameworks measure up, we would be glad to help. Get in touch with our team to find out more about how we can support your compliance journey.