HIGHLIGHTS ¦ DEMSA Newsletter

What you need to know this week

UK economic output contracted by 0.1% in October 2025, with output also down 0.1% over the three months to October, underscoring a fragile growth outlook for 2026.
Supply-side disruption continues to affect manufacturing: the Jaguar Land Rover cyber-attack remains a drag on production, with only a modest October recovery.
Market expectations remain for a further cut in interest rates, but the narrative of investment-led growth in 2026 is not yet supported by clear confidence indicators in households or businesses.
The Bank of England has warned about a potential AI-led valuation correction, noting stretched UK equity pricing versus post-2008 norms and US valuations reminiscent of the pre-dotcom period.
Motor finance redress planning is advancing: FCA consultation CP25/27 on an industry-wide consumer redress scheme has closed (12/12/2025).
The FCA is progressing insurance rules simplification, signalling a broader “smarter regulation” agenda and shifting more responsibility to firms for product review cadence and CPD expectations.
Water affordability pressures persist: Ofwat reports 47% of respondents struggled at least sometimes to pay household bills; 17% struggled with water bills and 32% were concerned about water bill costs.
Consumer affordability stress remains uneven by household type: Lowell data indicates pressure is greatest for single-parent households (44% worse off) and a divided picture for couples with dependents (30% improved; 39% worsened).
The FCA and ICO have jointly clarified expectations on Targeted Support and Direct Marketing, reinforcing the need to balance timely financial support communications with privacy/PECR compliance.
The FCA Regulatory Initiatives Grid (Dec 2025) indicates 124 live initiatives (down 13%), with notable timelines for Consumer Duty updates, complaints reporting reforms, AML changes, and open finance/smart data frameworks.
The FCA has confirmed final guidance on non-financial misconduct (PS25/23), bringing serious NFM clearly into scope of Conduct Rules and setting an implementation date of 1 September 2026.
A new public-sector recovery approach is emerging: the DWP consultation on Codes of Practice under the Public Authorities (Fraud, Error and Recovery) Act 2025 includes powers to recover debts from bank accounts and references debt advice multiple times; consultation closes 27 February 2026.