Fintech, digital assets, payments and consumer credit | UK Regulatory Outlook April 2026

FCA launches £7.5 billion motor finance compensation scheme 

On 30 March 2026, the Financial Conduct Authority (FCA) published a statement and a policy statement (PS26/3) setting out the details of its compensation scheme for motor finance complaints.  

There will be an implementation period to enable firms to prepare to operate the scheme. For loans taken out from 1 April 2014, the implementation period runs until 30 June 2026; for those agreed earlier, it runs until 31 August 2026. Lenders will then have three months from the end of the relevant implementation period to inform complainants whether they are owed compensation and, if so, how much. 

Please see Osborne Clarke's Insight for more details, including the key changes since the FCA consulted in autumn 2025, and advertising and marketing section. 

Contactless payments limit lifted  

On 19 March 2026, the FCA published an updated version of its Payments and E-money Approach Document to reflect changes to contactless payment limits that came into force on the same date.  

The regulator confirmed in December 2025 that it would remove the contactless cap of £100, giving banks greater flexibility to set their own contactless payment limits subject to strong fraud controls. However, it remains to be seen whether firms will take up this option in practice.  

FCA calls for input on access to finance for SMEs 

On 18 March 2026, the FCA published a call for input on how regulation can help small and medium-sized enterprises (SMEs) access finance.  

SMEs are crucial to the UK economy – at the start of 2025, they accounted for 60% of private sector employment and 50% of its turnover. The FCA is seeking views from SMEs, and from providers and distributors of SME finance, on how its regulation can support SME finance across debt, equity, hybrid and alternative finance.  

The focus will be on regulated financial products and services, but the FCA will also consider the impact of its regulation on regulated firms that offer SMEs products and services outside the regulatory perimeter. 

The areas of interest for the regulator are: 

• Barriers to SME finance, including regulation that directly affects the cost and/or perceived risk of lending to or investing in SMEs.
• Opportunities for regulation to support the provision of SME finance better, such as industry collaboration, and adopting innovation and new technology.
• Sector-specific issues in obtaining finance, particularly for high-growth sectors such as advanced manufacturing, clean energy industries, creative industries, defence, digital and technologies, financial services, life sciences, and professional and business services.
• Future trends, including the role of open finance. 

The FCA will be engaging with industry and key stakeholders on this issue, and intends to publish a summary of its findings and an update on next steps later in 2026. 

Future of agentic AI paper published by DRCF 

On 31 March 2026, the Digital Regulation Cooperation Forum (DRCF), which comprises the CMA, FCA, ICO and Ofcom, published a paper exploring how UK regulatory frameworks across sectors can support the responsible development of agentic AI.  

Key risks flagged in the paper include the following: 

• Without robust oversight, agents risk becoming "black boxes" lacking in transparency, even more so in the case of multi-agent systems – for example, it may be difficult for users to contest an agent’s decision.
• The emergence of algorithmic collusion, where agents spontaneously collude without being instructed to do so, for example resulting in supra-competitive pricing.
• Action bundling, whereby agents rapidly execute multi-step workflows (such as accepting terms, making purchases or signing up to services) without the user experiencing each step as a separate decision, could complicate regulatory oversight and accountability.
• In the event agents become embedded in platforms, businesses could experience pressure to compete to be favoured by the agent, rather than offering the best product, service or price to consumers. 

There are also clear risks around cybersecurity, data protection and consumer protection issues more broadly. See also artificial intelligence section. 

FCA update on the temporary permissions regime for buy-now, pay-later lenders 

On 2 April 2026, the FCA updated its webpage on regulating buy-now, pay-later, also known as deferred payment credit (DPC), publishing directions and a notification form for the temporary permissions regime (TPR) for DPC lenders. 

The FCA will begin regulating DPC on 15 July 2026. The temporary permissions regime will allow firms that were already carrying on DPC activity at this point to continue operating on a temporary basis. 

The directions specify that: 

• Eligible firms can register for temporary permission between 15 May 2026 and 1 July 2026 – a fee is also payable.
• Firms with temporary permission may apply for permission relating to DPC activities from 8 July 2026 until 15 January 2027. 

Any firm that does not currently have the right permissions and does not register for the temporary permissions regime will not be able to enter into new DPC agreements after 15 July 2026. Firms that are not authorised or do not have a temporary permission will continue to be able to service DPC agreements that were taken out before that date.