The Financial Conduct Authority (FCA) has just unveiled its latest regulatory refresh – FS25/2 – on 25th March 2025. For businesses operating in the consumer credit sector, this is more than just a policy update—it’s a chance to breathe easier as the FCA trims unnecessary complexity and sharpens its focus on outcomes-based regulation.
Let’s break down what’s changing and how it may impact your business in the consumer credit space!
A Leaner, Smarter Regulatory Approach
FS25/2 is designed to streamline compliance requirements, reducing unnecessary burdens while ensuring strong consumer protections remain in place. With consumer credit firms already juggling affordability assessments, disclosures, and reporting obligations, these changes could bring some welcome relief.
Key Changes and Their Impact on Consumer Credit Firms
- Clarifying Regulatory Scope
The FCA is reassessing how its rules apply, particularly for firms with customers outside the UK. For consumer credit firms offering products to international clients or those dealing with cross-border lending, clearer guidance could help navigate compliance more effectively.
- Refining Key Definitions
Ambiguities in regulatory definitions can cause headaches for firms. By reviewing core definitions, the FCA aims to bring consistency, making it easier for consumer credit businesses to interpret and implement rules without second-guessing compliance obligations.
- Simplifying Disclosure Requirements
Firms in the consumer credit sector are often required to provide extensive disclosures, sometimes at the risk of overwhelming customers rather than informing them. The FCA’s shift towards outcome-focused disclosure rules could allow for clearer, more effective consumer communications that improve engagement and understanding.
- Reducing Administrative Burdens
Consumer credit firms frequently face extensive paperwork and reporting obligations. The FCA’s push to reduce administrative burdens could mean fewer tick-box exercises and more practical compliance measures, allowing businesses to focus on delivering responsible lending rather than drowning in red tape.
- Updating Outdated Rules
Some consumer credit regulations have become outdated or overly complex. The FCA is identifying and removing such rules to ensure that businesses are working within a more streamlined and relevant framework, helping firms adapt more easily to evolving consumer needs.
Immediate Actions to Be Aware Of
- Faster Consultations – Where there is broad agreement on necessary changes, the FCA is moving quickly to consult and implement reforms. Consumer credit firms should stay engaged to ensure their views are represented.
- Reviewing Old FCA Communications – Legacy guidance, such as older Dear CEO and portfolio letters, is being reviewed. Firms should monitor these changes to ensure they are aligned with the latest expectations.
Looking Ahead: What Consumer Credit Firms Should Expect
- Ongoing Stakeholder Engagement – The FCA is actively seeking input from consumer credit firms and trade bodies to shape future regulatory refinements.
- Regulatory Summit (Summer 2025) – An event bringing together industry leaders to discuss the next phase of regulatory simplification and how it will impact firms in the consumer credit space.
- September 2025 Progress Report – A follow-up statement outlining the FCA’s next steps and the progress made in cutting regulatory complexity.
Final Thoughts
For consumer credit businesses, FS25/2 represents a shift towards a more practical and flexible regulatory framework. By reducing compliance complexity, firms can allocate more resources towards responsible lending and customer service rather than navigating a maze of overlapping rules. While challenges remain, this update signals a positive step towards making regulation work more efficiently for both businesses and consumers alike.
ALPH Legal can assist with all aspects of your business’ compliance needs whether that be compliance structure and policy, internal/external audit, business and regulatory change support, authorisation, supervision or just some general expert advice and guidance!
Take action now with ALPH Legal & Compliance services!
With all the regulatory shifts on the horizon, now is the time to act. Don’t wait until compliance gaps appear – engage with ALPH Legal today to ensure your firm is ahead of the curve. Whether you need tailored guidance, compliance support, or strategic insights to drive new business, ALPH Legal is your trusted partner in navigating FCA regulations with confidence.
Contact ALPH Legal now and take control of your compliance future!