Fintech, digital assets, payments and consumer credit | UK Regulatory Outlook June 2025

Fintech 

Cryptoassets updates 

FCA consults on proposed Handbook changes

On 6 June 2025, the Financial Conduct Authority (FCA) published a consultation paper, covering minor miscellaneous proposed amendments to the Handbook, including to Chapter 4: lift the ban on the retail sale, marketing and distribution of cryptoasset exchange traded notes (cETNs) where admitted to a UK recognised investment exchange (UK RIE), and categorise these cETNs as Restricted Mass Market Investments.  

The FCA welcomes comments by 7 July 2025.  

FCA consults on stablecoin issuance and cryptoasset custody rules and prudential regime for cryptoasset firms 

On 28 May 2025, the FCA published a consultation paper on stablecoin issuance and cryptoasset custody. The proposed requirements for issuers cover the offer and redemption of qualifying stablecoins, the holding and management of qualifying stablecoin-backing assets and key information issuers will need to disclose about their qualifying stablecoins – designed to ensure issuers have the right resources, processes and controls in place to promote the stability, transparency and reliability of qualifying stablecoins.  

The FCA also published a consultation paper on a proposed prudential regime for cryptoasset firms. The FCA's long-term vision is to establish an integrated prudential sourcebook bringing together core prudential requirements (COREPRU), supplemented by sector-specific sourcebooks. Initially, COREPRU will apply only to firms carrying on regulated cryptoasset activities – while the FCA proposes that the sector-specific requirements for firms carrying on regulated cryptoasset activities will be included in a sourcebook known as the Prudential Sourcebook for Cryptoasset businesses (CRYPTOPRU). 

Comments to both consultations are invited until 31 July 2025. The FCA will then set out final rules and guidance (expected in 2026) before implementing the new regimes. 

Responses to HM Treasury relating to draft cryptoassets regulated activities 

On 27 May 2025, the Financial Markets Law Committee (FMLC) published a letter to HM Treasury, highlighting areas of legal uncertainty relating to new cryptoasset regulated activities as set out in the draft Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025, published in April 2025. 

The FMLC's concerns include: 

• Overlaps between "qualifying stablecoin" and "electronic money" definitions: the FMLC says that the scope of the definitions means it is not possible to conclude whether several existing stablecoins would be deemed to be qualifying stablecoins or electronic money.
• Expansion of new safeguarding activity: there is concern that the expanded scope of the new safeguarding activity may be disruptive to current market practices.
• Potential application of new safeguarding activity to traditional securities: the new safeguarding activity applies to relevant specified investment cryptoassets, which is defined very broadly. As such, it is possible that the registration or safeguarding of any securities custodied in the UK (including securities recorded in CREST) could be in scope.
• Territorial scope of new regime: although it understands that the policy intention is that overseas cryptoasset firms serving only UK institutional customers will not require authorisation, the FMLC considers it unclear whether such an outcome has been achieved via the amendments to section 418 of FSMA. 

On 28 May 2025, the International Regulatory Strategy Group (IRSG) published its response to HM Treasury regarding the 2025 Order, having identified areas where it considers clarity and alignment with the existing regulatory regime could be improved – including numerous definitions and territorial scope. 

Without amendment, the IRSG believes that the current approach may create unnecessary complexity and overlap, potentially leading to confusion and uncertainty. It also recommends an extended consultation period to capture the "significant refinements" needed to meet HM Treasury's policy outcomes. 

Other updates 

FCA leads international campaign against finfluencers using illegal financial promotions 

On 6 June 2025, the FCA announced that it has led an international campaign against finfluencers that use illegal financial promotions. The regulatory action occurred due to concerns that some finfluencers (that is, social media personalities who use their platforms to promote financial products and share insights and advice with followers) sell products or services illegally and without authorisation through online videos and posts, where they use the pretence of a lavish lifestyle, often falsely, to promote success. 

In the UK, the FCA has: 

• Made three arrests with the support of the City of London Police and authorised criminal proceedings against three individuals.
• Invited four finfluencers for interview.
• Sent seven cease and desist letters.
• Issued 50 warning alerts. 

The FCA also took action in October 2024 against certain finfluencers. 

FCA launches Supercharged Sandbox  

On 9 June 2025, the FCA announced that it has launched a "Supercharged Sandbox" to help firms experiment safely with AI and speed up innovation. 

Firms can apply to use Supercharged Sandbox now through the FCA's website, with applications open until 11 August 2025 and a go-live date to follow in October. 

Payments

PSR consolidated policy statement on APP scam reimbursement requirement 

On 22 May 2025, the Payment Systems Regulator (PSR) published a consolidated policy statement on its authorised push payment (APP) fraud reimbursement requirement scheme. The document consolidates the PSR's previous publications relating to the scheme and aims to serve as a single point of reference for those wishing to understand its reimbursement requirement and how it may affect them. 

Chapter five of the policy statement includes a summary of the most significant and frequently asked questions the PSR received relating to the scheme. The policy statement was issued as general guidance. While it is intended to help readers interpret the PSR's policy, the definitive requirements for the scheme are set out in the legal instruments on the PSR's website. Pay.UK, as the payment systems operator (PSO) for the Faster Payment System (FPS), maintains the FPS reimbursement requirements on its website. 

The PSR also published its requirements for the reimbursement of APP fraud committed over the CHAPS payment system. Those requirements are substantially the same as for FPS, and, except as otherwise indicated, the policy statement applies to payments made over FPS and CHAPS. 

The Bank of England, as the PSO for CHAPS, maintains the CHAPS reimbursement requirements, which are on its website. If any of the contents of the policy statement vary with the legal instruments or the FPS or CHAPS reimbursement rules, the latter prevail.  

Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 published 

On 13 June 2025, the Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 were published. The regulations, which will come into effect on 28 April 2026:  

• Enhance consumer protections when payment service providers (PSPs) terminate contracts with payment service users.
• Amend regulation 51 of the PSRs 2017 and introduce new regulations 51A to 51D.
• Extend the minimum notice period for contract terminations from two months to 90 days.
• Require PSPs to provide sufficiently detailed and specific explanations for contract termination so payment service users understand why their contract is being terminated.
• Inform payment service users of any right they may have to complain to the FOS. 

Consumer Finance 

HM Treasury response to consultation on regulating BNPL products and draft final legislation 

On 19 May 2025, HM Treasury published its response to the consultation on "buy now, pay later" (BNPL) reform, together with final legislation. On the same day, it also published its consultation on reforming the consumer credit regime. There are parallels between the two sets of proposals. 

See our Insight for more information.  

FCA statement on key considerations for implementing motor finance consumer redress scheme 

On 5 June 2025, the FCA published a statement setting out its key considerations if it were to implement a redress scheme as part of its review into motor finance commission arrangements. 

The FCA has previously said that if, following the outcome of the Supreme Court judgment on the Court of Appeal decision in Johnson v FirstRand Bank Ltd, it concludes that motor finance customers have lost out from firms' failings, the FCA is likely to consult on an industry-wide consumer redress scheme. The Supreme Court aims to deliver its judgment in July 2025, and the FCA plans to confirm, within six weeks of the judgment, whether it is proposing to introduce such a scheme. If the FCA decides to propose a redress scheme, it will publish a consultation setting out how it would work, together with draft rules. Following the consultation, the FCA would confirm whether it goes ahead with the scheme, and if so, what the final rules are.  

Some key considerations set out by the FCA are:  

Principles. The FCA outlined the principles it will use when designing a redress scheme, such as comprehensiveness, fairness, certainty, simplicity and cost effectiveness, timeliness, transparency and market integrity.  

Scope of a redress scheme. The FCA would need to consider whether the scheme would be opt-in, that is customers would have to confirm to their firm by a certain date that they wish to be included, or opt-out, where customers would be automatically included unless they opt out.  

Calculating redress. The FCA says that it may take a different approach to calculating redress in any intervention it makes. It highlights that any redress scheme must be fair to consumers who have lost out, and ensure the integrity of the motor finance market, so it works well for future consumers.