What you need to know this week
- The Bank of England held interest rates at 3.75% at its April 2026 MPC meeting (vote 8-1); chief economist Huw Pill was the sole dissenter, voting for a rise to 4%.
- Under Scenario C (most adverse), oil remains above $120/barrel for the rest of 2026, inflation peaks at 6.2% in early 2027, and rates could rise to 5.5% through up to six hikes.
- FCA H2 2025 complaints data: financial services firms received 1.87 million complaints, a 0.9% increase on H1 2025; insurance & pure protection rose 10.1%, while banking and credit cards fell 4.7%.
- Bank of England March 2026 Money & Credit data shows net mortgage borrowing rose to £6.2bn and annual consumer credit growth reached 8.9%, with credit card borrowing up 12.3% year-on-year.
- Credit union net liabilities in arrears increased 5.23% quarter-on-quarter to £284.06m in Q4 2025, even as total member loans reached a record high of £2.63bn.
- CP26/15 consults on simplifying CONC 3 financial promotions rules, designating debt as a higher-risk area with stricter guardrails; responses are due by 17 June 2026.
- The CCR009 return deadline for firms holding debt counselling and debt adjusting permissions passed on 28 April 2026; regulatory follow-up questions are anticipated.
- Consumer Duty board reports are due in July 2026; firms have a 3-month preparation window drawing on 2025 business model review insights and the FCA’s data-led supervisory approach.
- The Financial Ombudsman Service has responded to the Mills Review on AI, calling for transparency and clear rationale where AI contributes to consumer outcomes, aligned with Consumer Duty.
- The FCA’s targeted support regime launched on 6 April 2026; authorised firms may now provide greater support on investment and pension decisions, with FCA signposting requirements taking effect April 2027.
- The Money and Mental Health Policy Institute’s “Gambling in the Red” report recommends banks introduce automatic blocks on gambling payments in overdraft and proactive outreach to affected customers.
- AI Implementation Forum (Governance, Standards and Practical Implementation) takes place at BSI offices, Milton Keynes, on 25 June 2026; BSI, MEGA.AI, Money and Pensions Service, and PayPlan are confirmed sponsors.
Key Themes
1. Economic Outlook and Cost-of-Living Pressure
- The Bank of England held rates at 3.75% at its April 2026 MPC meeting; food and energy prices are expected to rise further due to energy costs and fertiliser availability.
- Under Scenario C (the most adverse scenario), oil above $120/barrel would push inflation to a 6.2% peak and could trigger up to six rate rises to 5.5% — with direct implications for borrower affordability and arrears.
- The BBC has outlined five key household impacts: rising interest rates, higher energy bills, increased mortgage costs, reduced low-income household resilience, and potential unemployment rises — all directly relevant to consumer credit risk.
- The FCA’s April 2026 Insights newsletter frames the agenda around innovating for growth, but the macro backdrop demands firms balance growth with proactive customer vulnerability responses before Q3 2026.
2. Consumer Credit, Mortgage Borrowing and Arrears Trends
- Net consumer credit borrowing reached £1.9bn in March 2026; annual growth of 8.9% (credit cards: 12.3%) sustains an upward trajectory that may mask deteriorating affordability at borrower level.
- Net mortgage borrowing rose sharply to £6.2bn in March, above the 6-month average of £4.9bn, reflecting demand ahead of anticipated rate rises.
- Credit union arrears rose 5.23% quarter-on-quarter to £284.06m in Q4 2025; as a sector disproportionately serving financially underserved consumers, this signals broader stress in lower-income segments.
- For arrears management and collections practitioners, these data points reinforce the case for early intervention strategies and proactive affordability review before Q3 2026.
3. CP26/15: Financial Promotions Reform and the Debt Sector
- The FCA’s CP26/15 proposes to consolidate all debt-related financial promotion rules, treat debt as a higher-risk promotion category, and maintain stricter disclosure guardrails; consultation closes 17 June 2026.
- The consultation also opens discussion on how APR and credit cost information is presented, with BNPL/DPC entering FCA regulation in July 2026 and proportionate affordability assessments required.
- The FCA raises concern that AI-mediated customer journeys may bypass prescribed warnings and deliberate friction points, particularly for consumers with low financial resilience — raising questions about whether current disclosure frameworks are fit for purpose.
- Debt solution firms (IVAs, debt management, debt consolidation) should audit current promotion compliance and prepare substantive responses to this consultation.
4. Consumer Duty: CCR009 Returns and Board Reports
- CCR009 returns were due on 28 April 2026 for firms holding debt counselling and debt adjusting permissions, covering 2025 business models including distribution chains, customer identification and contact centre arrangements; regulatory follow-up is anticipated.
- Consumer Duty board reports are due in July 2026; firms are now in a 3-month preparation window and should be consolidating outcomes-focused management information from 2025.
- The FCA is already acting on Product Sales Data (PSD) submitted since November 2025 (PS24/3), and new complaint handling requirements follow in June 2026 as part of DUAA 2025 implementation.
- New complaint reporting from July 2027 will include complaints relating to the Duty and customers showing characteristics of vulnerability — boards should factor this into their reporting infrastructure plans now.
5. AI in Financial Services: Governance, FOS Response and the Mills Review
- The FOS has responded to the FCA’s Mills Review on AI in retail financial services, supporting transparency and calling for regulated firms to provide a clear rationale on how AI-derived outcomes align with Consumer Duty principles.
- The FOS has raised concern that SM&CR and the Consumer Duty may not provide a sufficiently robust framework to govern rapid AI adoption over the next five years.
- For debt collection and consumer credit firms, the growing use of AI in customer journeys — including unregulated AI agents that may circumvent prescribed warnings — demands early governance investment aligned to ISO 42001 and Consumer Duty.
- The EU AI Act continues to evolve as an alternative regulatory model; firms with cross-border operations should monitor developments alongside the FCA’s domestic approach.
6. Vulnerability, Gambling Harm and Overdraft Risk
- The Money and Mental Health Policy Institute’s “Gambling in the Red” report recommends automatic blocks on gambling transactions when customers are in overdraft, alongside proactive outreach — with GamCare offering partnership support to financial services firms.
- People in financial difficulty are disproportionately affected by gambling harm; the availability of overdraft funds is identified as a compounding factor in escalating harm.
- For consumer credit and collections teams, identifying gambling harm as a vulnerability characteristic is increasingly consistent with FCA expectations and Consumer Duty outcomes obligations.
7. Targeted Support, MoneyHelper and FCA Signposting
- The FCA’s targeted support regime launched on 6 April 2026, allowing authorised firms to provide greater support on investment and pension decisions; MoneyHelper has published a consumer-facing guide to the types of support available.
- FCA signposting requirements for relevant aspects of COBS 16 and 19 take effect in April 2027; regulatory reporting has already been updated to integrate targeted support activity.
- Firms should ensure they understand the updated reporting expectations set out in the final targeted support instrument ahead of the April 2027 deadline.
8. Regulatory Compliance Burden: SM&CR Reform, ICO Tracking and Data Governance
- PS26/6 introduces Phase 1 SM&CR reforms, with clarification on the role of third-party compliance consultants and trade bodies; operationalising compliance is now a distinct management discipline, with new roles emerging in AI governance and expanded DPO responsibilities.
- The ICO’s April 2026 online tracking strategy update confirms ongoing enforcement on the digital advertising ecosystem; firms generating leads through digital channels in the debt solutions sector should review their PECR compliance and data sharing frameworks.
- The joint FCA/ICO statement on regulatory expectations for firms reinforces the convergence of data governance and consumer protection obligations, particularly for AI use cases and special category data.
9. Events
- VRS Conference: 7 May 2026, Nottingham City Ground — sold out; sessions include FCA, ICO, Ofgem, CCW and GamCare; breakout includes data-sharing and vulnerability registration.
- “Tell Us Once Twenty” webinar: 14 May 2026 (online via Teams) — examining how collaborative data-sharing approaches for consumer vulnerability can be scaled; registration is open.
- LinkedIn Live: next session 8 May 2026.
- AI Implementation Forum — Governance, Standards and Practical Implementation: 25 June 2026, BSI offices, Milton Keynes; confirmed sponsors include BSI, MEGA.AI, Money and Pensions Service, and PayPlan; focus on ISO 42001 and ISO 22458 alignment.
Key Statistics
- Bank of England base rate: 3.75% (held at April 2026 MPC meeting, vote 8-1).
- Scenario C peak inflation: 6.2% (early 2027); potential rate ceiling: 5.5% (up to six hikes).
- FCA H2 2025 total complaints: 1.87 million — up 0.9% on H1 2025 (1.85 million).
- Insurance & pure protection complaints: 790,329 (H2 2025) vs 717,523 (H1 2025) — up 10.1%.
- Banking and credit card complaints: 857,757 (H2 2025) vs 899,910 (H1 2025) — down 4.7%.
- Decumulation & pensions complaints: 87,842 (H2 2025) vs 94,035 (H1 2025) — down 6.6%.
- Home finance complaints: 75,658 (H2 2025) vs 78,616 (H1 2025) — down 3.8%.
- Investments complaints: 54,263 (H2 2025) vs 58,305 (H1 2025) — down 6.9%.
- Net mortgage borrowing (March 2026): £6.2 billion, up from £5.2 billion in February; 6-month average: £4.9 billion.
- Net consumer credit borrowing (March 2026): £1.9 billion (down from £2.0 billion in February); 6-month average: £1.8 billion.
- Annual consumer credit growth (March 2026): 8.9% (up from 8.6% in February).
- Annual credit card borrowing growth (March 2026): 12.3% (up from 12.1%).
- Annual other consumer credit growth (March 2026): 7.4% (up from 7.0%).
- Credit union adult membership (Q4 2025): 2.16 million — rebounded by 0.16%.
- Credit union total loans to members (Q4 2025): £2.63 billion — a record high; quarterly growth of 0.75%.
- Credit union total assets (Q4 2025): £4.89 billion — down 0.57%.
- Credit union net liabilities in arrears (Q4 2025): £284.06 million — up 5.23% quarter-on-quarter.
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