What you need to know this week
- Regulators signalled constraints on delivery of growth initiatives where primary legislation remains outstanding, including Buy Now Pay Later and targeted support.
- The FCA confirmed it cannot finalise targeted support rules until Parliament creates a new regulated activity, with a statutory instrument expected by end of Q1 2026.
- The Bank of England held Bank Rate at 3.75% on 4 February 2026, with a 5–4 MPC split and continued inflation risks.
- Average UK house prices rose to £300,077 in January 2026, while ONS data showed £271,000 in November.
- The TV licence fee will rise to £180 from 1 April 2026, an item commonly included in Standard Financial Statements.
- Credit card spending increased by 2.6% between October and November 2025.
- The Crisis and Resilience Fund will replace the Household Support Fund from April 2026 for a three-year period.
- DUAA 2025 data protection reforms took effect on 5 February 2026, altering UK GDPR and PECR, including rules on automated decision-making.
- Further DUAA changes introduce a statutory complaints process for data controllers by 19 June 2026.
- AI voice cloning is being used in the UK to facilitate fraud, including unauthorised direct debits and impersonation scams.
- New MaPS research found single men aged 18–34 are least likely to identify romance scam warning signs.
- Multiple sector events are scheduled between February and May 2026, including Manchester (14 April) and Nottingham (7 May).
Key Themes
Regulatory delivery and legislative dependency
- Regulators highlighted limits to progress where primary legislation is required, notably for BNPL and targeted support.
- FCA correspondence emphasised reliance on Parliamentary action to advance consumer support reforms.
- Matters for firms planning product launches and compliance roadmaps dependent on regulatory perimeter changes.
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Macroeconomic pressure and household affordability
- Interest rates remained at 3.75%, while property prices and essential household costs increased.
- Rising fixed costs continue to affect affordability assessments and SFS construction.
- Relevant for arrears strategies, vulnerability identification and income-expenditure modelling.
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Credit usage and consumer financial behaviour
- Credit card spending rose by 2.6% between October and November 2025.
- Data points to continued reliance on revolving credit amid cost pressures.
- Informs credit risk monitoring and early intervention strategies.
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Local crisis support and financial resilience
- The Crisis and Resilience Fund will replace the Household Support Fund from April 2026.
- The fund aims to move away from short-term funding cycles for local crisis support.
- Impacts referrals, partnership working and local authority engagement.
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Vulnerability, suicidality and collections practices
- Policy papers highlighted the role of financial services in suicide prevention.
- Guidance stressed limiting contact intensity and ensuring supportive communications.
- Directly relevant to collections strategies, staff training and vulnerability frameworks.
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AI governance and customer experience
- AI is increasingly embedded in CCaaS platforms, extending beyond agent assist.
- Accountability, transparency and governance are becoming focal points for senior managers.
- Aligns with regulatory scrutiny and internal AI oversight models.
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Data protection reform and automated decision-making
- DUAA 2025 introduced a more permissive, safeguard-based approach to automated decisions.
- Requirements include meaningful human involvement and updated DPIAs.
- Significant for firms using AI in credit, collections and customer engagement.
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Payments regulation and open banking
- The PSR is being consolidated into the FCA, with legislative changes expected in late 2026.
- Open banking reached over 16m active users with 53% payment growth in 2025.
- Implications for payment resilience, fraud risk and future interoperability.
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Financial crime enabled by AI
- AI voice cloning is being used to facilitate impersonation and unauthorised payments.
- Criminal activity exploits weaknesses in ID and verification processes.
- Raises expectations on firms to strengthen controls and consumer protection.
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Key Statistics
- Bank Rate held at 3.75% following MPC vote on 4 February 2026.
- MPC vote split was 5–4 in favour of holding rates.
- Average UK property price reached £300,077 in January 2026.
- Average UK house price was £271,000 in November (ONS).
- TV licence cost will rise to £180 from 1 April 2026.
- Credit card spending increased by 2.6% between October and November 2025.
- Open banking has over 16m active users.
- Open banking payments grew by 53% in 2025.
Newsletter Contents
- Regulatory progress updates linked to growth initiatives.
- FCA correspondence on legislative dependencies.
- Interest rate and housing market developments.
- Cost of living impacts on household budgets.
- Credit card usage trends.
- Changes to local crisis support funding.
- Vulnerability and suicide prevention guidance.
- AI adoption in customer engagement platforms.
- Data protection and automated decision-making reforms.
- Emerging AI-enabled financial crime risks.
- Cross-sector collaborations and partnerships.
- Upcoming sector events through May 2026.
Find the full DEMSA newsletter, commentary and links here
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