A Smarter Regulator: Alison Walters outlines the FCA’s 2026 priorities in consumer finance

Replacing more than 40 individual portfolio letters, the regulator’s new consumer finance regulatory priorities report is intended to act as a single guide for firms’ boards and executive teams.

 

In an interview with Credit Strategy, Alison Walters, director of consumer finance at the FCA, explains how the new approach reflects the regulator’s ambition to become a “smarter regulator” – and what it means for lenders, banks and senior leaders across the industry.

 

A smarter regulator: Why the FCA is changing its approach

The FCA’s move away from portfolio letters is designed to make regulatory expectations clearer and more accessible for firms.

 

Walters says the change forms part of the regulator’s broader five-year strategy.

 

“The reports are part of our commitment to be a smarter regulator, which is what we set out in our five-year strategy, launched last year, purposely replacing the portfolio letters.”

 

Previously, firms often had to navigate dozens of communications to understand regulatory priorities.

 

“There were, 40 plus portfolio letters. Making it very difficult for firms to really ascertain what our key priorities are, what our key focuses were.”

 

The new report aims to consolidate this information.

 

“We can put all of the information in a single place, almost like a one stop shop in a standardised format, removing duplication and ensuring that sectors and markets are clear about the expectations that we have for them.”

 

For firms, the expectation remains the same as under the former Dear CEO letters.

 

“We still expect firms and their senior management to take this into account in their risk management and their compliance and really look at the areas of focus and consider what it means for them.”

 

The report will also be produced annually as part of the FCA’s communication with the sector.

 

The FCA’s three core priorities for consumer finance

The report sets out three key priorities for the consumer finance market in the coming year:

1. Consumers can access credit that meets their needs
2. Firms support consumers who struggle with debt
3. Consumers can complain when things go wrong and receive appropriate redress

These priorities reflect the FCA’s ongoing focus on consumer outcomes, anchored in the Consumer Duty.

 

1. Consumers can access credit that meets their needs

 

Responsible innovation and access to credit

Improving access to credit remains a central objective for the regulator but it must be delivered responsibly.

 

Walters emphasises that innovation should always be grounded in strong consumer protections.

 

“We obviously think about things in terms of responsible lending, really taking into account the consumer duty, looking at fair value, ensuring consumers can understand, but most importantly, that firms are delivering good outcomes.”

 

The FCA believes an outcomes-focused regulatory environment should give firms space to innovate.

 

“Hopefully that outcomes focused approach enables firms to innovate and really think about the data that they use, be that open finance, open banking, and other means of being able to drive those good consumer outcomes.”

 

However, she stresses that the Consumer Duty remains the foundation.

 

Balancing credit access with affordability

Expanding access to credit must also be balanced against the risk of consumers taking on unaffordable debt.

For the FCA, creditworthiness assessments remain critical.

 

“We don’t want consumers to get into unaffordable debt.”

 

Firms must consider the entire consumer journey particularly when customers encounter financial difficulties.

 

“We want firms to think about all parts of the journey… giving them the freedom in an outcomes focused environment to be creative and innovative.”

 

The FCA is also working to improve credit data quality, which could help lenders expand responsible access to credit.

 

“Improving the accuracy and the quality of credit information hopefully enables firms to take into account better information in order to provide greater access to credit.”

 

This also aims to reduce the number of consumers with thin credit files or limited credit histories.

 

2. Firms support customers who struggle with debt

 

Supporting consumers in financial difficulty

The FCA believes many households remain under financial pressure.

 

Walters says firms must ensure support is available when customers struggle.

 

“It’s really important that firms are able to support customers when they get into financial difficulty.”

 

This includes:

• Signposting consumers to appropriate support
• Providing effective forbearance
• Helping customers access debt advice

“It’s really important that firms take those steps and that consumers are able to access appropriate debt advice.”

 

Early engagement is especially important. The FCA’s vulnerability research shows better outcomes when consumers seek help early.

 

“Those consumers that engage early are able to access a higher level of support rather than those consumers who don’t.”

 

Walters also highlights the stigma associated with financial difficulty.

 

“For example, it’s a very stressful time for somebody who’s suffered a negative life event and there is a degree of stigmatism around being in financial difficulty.”

 

When firms respond with empathy and support, customers are more likely to recover financially.

 

3. Consumers can complain when things go wrong and receive appropriate redress

 

Complaints, redress and rebuilding trust

The third priority centres on complaints handling and consumer redress. Walters says strong complaint processes deliver benefits beyond individual cases.

 

“It goes to the heart of product design because you’re looking at outcomes and you’re putting that through your processes.”

 

Good complaint handling helps firms identify systemic problems earlier.

 

“Trends and issues are picked up as well as improving the overall outcomes for consumers.”

 

Robust systems and record-keeping are essential.

 

“Adequate records are so important in ensuring that firms have the right resources there to manage complaints.”

 

This is particularly relevant in the context of motor finance complaints, where large volumes of claims are already being handled by firms.

 

Regardless of whether a formal redress scheme is introduced, the regulator expects firms to process complaints efficiently.

 

“We want firms to ensure they are acting swiftly, returning redress and compensation to the consumers that deserve it.”

 

The role of claims management companies

Claims management companies (CMCs) also have a role in helping consumers pursue compensation.

 

However, Walters says firms must operate in consumers’ best interests.

 

“When that business model works well and acts in the interests of consumers, it can absolutely deliver good outcomes.”

 

The FCA has already intervened where marketing practices have been misleading.

 

“We’ve amended/withdrawn over 800 financial promotions where they’ve potentially been misleading for consumers.”

 

Other areas of focus

 

Consumer Duty remains central to supervision

Across all areas of supervision, the Consumer Duty continues to underpin the FCA’s regulatory approach.

 

The regulator will continue to assess whether consumers:

• Understand the products they are using
• Receive fair value
• Are supported when things go wrong

“It very much informs every part of supervisory work in terms of how we engage with firms.”

 

Preparing for Buy Now Pay Later regulation

The FCA is also preparing for the regulation of deferred payment credit, also referred to as BNPL.

 

The new regime will go live on 15 July, giving firms a short period to prepare.

 

“The government made the legislation in May last year and we published our final rules in February, so firms have got about five months or so to get ready for regulation day.”

 

Key areas of focus include:

• Creditworthiness assessments
• Consumer information requirements
• Customer protections and redress routes

“We’re talking to firms about how they’re going to be embedding the information requirements and how they’re thinking about creditworthiness assessments.”

 

Walters notes that the FCA are engaging with firms in terms of how they are thinking about the journey of BNPL.  

 

“It’s a frictionless and mostly online journey at the moment. So we’re talking to firms about how they’re going to be embedding the information requirements that we’ve set out in the policy statement.”

 

Any new regulatory controls must remain proportionate.

 

“Ensuring that any steps firms put in place are commensurate with the risk profile of that particular product.”

 

AI: Opportunity with safeguards

Artificial intelligence is another major area of focus for the regulator with huge opportunities. The FCA is encouraging experimentation through its sandbox and innovation pathways.

 

However, firms must also consider potential risks, particularly around financial exclusion.

 

“AI is another form of big data, which can potentially lead to some segments of consumers being excluded.”

 

Firms must therefore monitor outcomes carefully. Despite these risks, Walters believes the technology can drive efficiency and growth.

 

“A massive opportunity to speed things up, really focus in on innovation and growth.”

 

A milestone in the FCA’s regulatory strategy

Walters concludes that the new report represents a significant step forward in the FCA’s supervisory approach. Ultimately, the regulator hopes the industry sees the change as a positive shift.

 

“We’re really delivering on our smarter regulator commitment; it’s quite an important milestone for us as a regulator.”

 

And for firms across consumer finance, the message is clear: the FCA wants its priorities to be easier to understand and easier to act on. The report also encourages the industry to engage with the FCA, share feedback and challenge their thinking as they refine this new model.

 

“Hopefully industry will receive it in the same intent and recognise that it’s us really listening to market participants.”

 

Alison will be delivering a keynote address at Credit Week 2026.