What you need to know this week
- UK population reached 69,487,000 in mid-2025, with employment at 75.1% and unemployment at 5.1%.
- 80,490 homeowner mortgages were in arrears of 2.5% or more in Q4 2025, down 4% on the previous quarter.
- 1,210 homeowner mortgaged properties were taken into possession in Q4 2025, 13% fewer than the previous quarter.
- AI adoption remains modest and uneven, with 16% of UK businesses currently using at least one AI technology.
- The FCA published PS26/1 introducing BNPL borrower protections effective 15 July 2026 under Consumer Duty.
- BNPL usage reached over £13 billion in 2024, with 20% of UK consumers using it in the year to May 2024.
- The Affordability Summit will take place on 14 April 2026 in Manchester, focusing on affordability, AI and regulatory scrutiny.
- A sector-specific Large Language Model for debt advice is being developed under the MaPS Debt Advice Transformation Fund.
- HM Treasury’s consultation on the Appointed Representatives regime closes on 9 April 2026 and proposes a new regulatory gateway for principals.
- The Government Cyber Action Plan and Cyber Security & Resilience Bill strengthen operational resilience expectations in 2026.
- Firms must implement a compliant data protection complaints process by 19 June 2026 under DUAA 2025.
- A series of sector events will take place between 17 February 2026 and 7 May 2026 covering Consumer Duty, fraud, AI and enforcement.
Key Themes
Macroeconomic and Credit Performance Backdrop
- UK population and labour market data provide context for affordability and credit risk.
- Mortgage arrears and possessions declined in Q4 2025 and remain below long-term averages.
- Continued tailored lender support reflects ongoing forbearance activity.
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AI Adoption Across the UK Economy
- Government research shows 16% adoption, with higher penetration in Information & Communication and Finance & Real Estate.
- Ethical concerns, cost and regulatory uncertainty remain primary barriers.
- Public sector investment is significant, with NHS Trusts reporting 70% moderate or significant adoption.
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BNPL Regulation and Market Expansion
- PS26/1 brings deferred payment credit within Consumer Duty from 15 July 2026.
- Firms must implement proportionate creditworthiness assessments and clearer communications.
- BNPL volumes and usage continue to expand rapidly across demographics and payment channels.
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AI in Debt Advice and Standards Reform
- A proof-of-concept LLM is being trained on FCA Handbook, SFS guidance and accredited training materials.
- The initiative supports adviser capability rather than replacing advisers.
- MaPS is upgrading its Standards Toolkit and tech platform to strengthen consistency and AI integration.
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Appointed Representatives Regime Reform
- Consultation proposes a regulatory gateway for principal firms and enhanced FCA oversight.
- ARs would fall under SM&CR and expanded FOS jurisdiction in certain circumstances.
- Ongoing obligations include enhanced monitoring, annual reviews and REP025 reporting.
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Cyber Resilience and Operational Risk
- Government Cyber Action Plan emphasises national resilience amid rising ransomware and AI-enabled attacks.
- NCSC handled 429 incidents, including 204 nationally significant cases.
- Legislative reform and FCA/ICO scrutiny increase board-level accountability.
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Data Protection Complaints Reform
- DUAA 2025 introduces mandatory data protection complaint processes by 19 June 2026.
- ICO final guidance clarifies what firms must, should and could do.
- Timelines differ from FCA-regulated complaint handling.
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Sector Collaboration and AI Deployment
- BPO Collections and MEGA.AI collaboration focuses on identity verification, scalability and governance.
- Contact centre AI success depends on defined objectives, risk appetite and measurable KPIs.
- Industry events highlight AI governance, fraud prevention and operational efficiency themes.
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Key Statistics
- 69,487,000 UK population (mid-2025).
- 75.1% employment rate.
- 5.1% unemployment rate.
- 80,490 homeowner mortgages in arrears of 2.5% or more in Q4 2025.
- 0.92% of homeowner mortgages in arrears.
- 0.5% of BTL mortgages in arrears.
- 1,210 homeowner mortgaged properties taken into possession in Q4 2025.
- 16% of businesses using at least one AI technology.
- 43% adoption in Information & Communication sector.
- 85% of AI adopters using natural language processing and text generation tools.
- £13 billion BNPL market size in 2024.
- 20% of UK consumers (10.9m adults) used BNPL in the 12 months to May 2024.
- 54% of UK adults have used BNPL services as of 2026.
- £27.1 billion forecast BNPL transaction value.
- 429 incidents handled by NCSC, including 204 nationally significant.
Newsletter Contents
- Macroeconomic indicators and labour market context.
- Q4 2025 mortgage arrears and possession trends.
- Government AI adoption research findings.
- Hoist Finance acquisition of Azzurro Associates.
- FCA PS26/1 deferred payment credit regime.
- Market data and demographic shifts in BNPL usage.
- Affordability Summit agenda and speakers.
- Progress on the Money Wellness LLM project.
- MaPS Standards Toolkit and tech platform procurement update.
- HM Treasury consultation on AR regime reform.
- Government Cyber Action Plan and resilience legislation.
- Forthcoming sector events across February–May 2026.
Find the full DEMSA newsletter, commentary and links here
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