Fintech, digital assets, payments and consumer credit | UK Regulatory Outlook November 2025
Published on 26th November 2025
G7 Cyber Expert Group statement on AI and cyber security | BoE update on digital pound | PSR consults on methodology for developing cap for multilateral interchange fees | FCA consults on motor finance compensation scheme
Fintech
G7 Cyber Expert Group statement on AI and cyber security
HM Treasury published a G7 Cyber Expert Group (CEG) statement on 6 November 2025, addressing AI and cyber security.
The CEG advises G7 finance ministers and central bank governors on cyber security policy issues critical to the security and resilience of the financial system. The aim of the statement was to raise awareness of AI's cyber security elements and outline key considerations for financial institutions, regulatory authorities and other stakeholders that support security and resilience in the financial sector. It does not set guidance or regulatory expectations.
The statement provides examples highlighting the potential of AI to strengthen cyber defences, amplify existing threats and expose vulnerabilities rooted in AI system design and data usage.
The CEG notes that AI may influence cyber security-related risks in the financial sector in several ways depending on the trajectory and maturity of AI adoption.
To assist financial institutions in managing AI-related cyber risks, the CEG sets out a list of questions to consider.
Agentic AI call for views launched
The Digital Regulation Co-operation Forum (DRCF) (a multi-regulatory initiative involving the ICO, the CMA, the FCA and Ofcom) launched a call for views on regulatory challenges associated with the adoption of agentic AI. Agentic AI is an AI system capable of independent decision making.
The DRCF sought responses from Agentic AI innovators, deployers, legal and compliance professionals, academics and civil society groups by 6 November 2025.
Digital Assets
BoE update on digital pound
The Bank of England (BoE) released a progress update on 23 October 2025 concerning its work to develop a digital pound.
Although the BoE has not yet decided whether to introduce a digital pound, its work to date has strengthened its understanding of the opportunities and challenges, while laying the foundations for a future decision.
Its priority now is to finalise the blueprint for a potential digital pound, focusing on evidence-based design, industry collaboration and alignment with the UK's broader payments vision. The blueprint will be published in 2026, supported by design notes.
Payments
PSR consults on methodology for developing cap for multilateral interchange fees
On 10 October 2025, the Payments System Regulator (PSR) published a consultation paper regarding a methodology for developing a price cap on multilateral interchange fees (MIFs) for UK-EEA card-not-present (CNP) outbound transactions.
The decision to impose a cap follows the findings of its market review into cross-border interchange fees, which concluded that interchange fees on UK-EEA CNP outbound transactions were unduly high.
The PSR proposes using the merchant indifference test (MIT) as a starting point. It will decide on an appropriate cap based on the MIT and on evidence of how interchange fees affect issuers' incentives and on competition between methods of payment.
The consultation focuses on the PSR's proposed methodology for identifying an appropriate level of MIF in the UK-EEA CNP outbound corridor. The consultation closed on 21 November 2025, after which the PSR will consider its next steps and consult further before making a final decision on whether to impose a cap.
FSB 2025 progress report on G20 roadmap for enhancing cross-border payments
On 9 October 2025, the Financial Stability Board (FSB) published a consolidated progress report regarding actions being progressed as part of the G20 roadmap for enhancing cross-border payments.
Significant progress has been made on the G20 roadmap's planned actions. Most of the major policy development initiatives set out in the roadmap have been achieved, including levelling the playing field for bank and non-bank payment service providers and mitigating data-related frictions in cross-border payments.
The report highlights the importance of jurisdictions implementing the policy recommendations on legal, regulatory and supervisory issues. The FSB plans to intensify its efforts during 2026 to drive implementation of those policy recommendations and to support jurisdictions in overcoming barriers.
FSB and IOSCO progress reports on implementation of cryptoasset regulatory framework
On 16 October 2025, complementary reports setting out high-level recommendations for the regulation and oversight of cryptoassets and global stablecoins were published:
the Financial Stability Board peer review report outlines the implementation progress by FSB jurisdictions and some volunteering non-FSB jurisdictions in implementing its global regulatory framework for cryptoasset activities; and
the International Organization of Securities Commissions (IOSCO) thematic review report assesses the implementation of ten of the 18 policy recommendations for crypto and digital asset markets published in November 2023.
As well as identifying challenges and gaps, the reports (i) highlight opportunities for closer alignment with global standards such as uneven implementation, the risk of regulatory arbitrage and enforcement gaps and (ii) set out recommendations both for participating jurisdictions and standard setting bodies.
FCA and PSR respond to HM Treasury proposals to consolidate PSR functions within FCA
On 23 October 2025, the FCA and the PSR published a joint response to HM Treasury's consultation on its proposed approach to consolidating the PSR's functions within the FCA.
Among other things, the FCA and PSR:
welcome the proposals, agreeing with the overarching approach to the consolidation;
support the continuation of the scope and substance of the PSR's core functions, objectives and powers;
support the consolidation of the PSR's functions within the FCA's existing framework of objectives and powers in the Financial Services and Markets Act 2000 (FSMA);
believe that the consultation proposals will avoid unnecessary duplication, complexity or uncertainty, while retaining the scope of both regimes; and
welcome the government considering whether there are opportunities to improve other areas of the PSR's current powers.
The response notes the potential in the longer term for:
adapting aspects of the FSMA regime to payment systems regulation; and
a review of how the developing future regulated activities regime for stablecoins or other cryptoassets fits with the regulation of systems that use such technology to transfer funds.
UK finance fraud report
On 24 October 2025, UK Finance published its half year fraud report. Key figures include:
criminals stole £629.3 million in the first half of the year, a 3% increase on the same period in 2024;
there were over 2.09 million confirmed cases of fraud, a 17% increase in the same period in 2024;
banks prevented £870 million of unauthorised fraud through advanced security systems, 20% more than in the first half of 2024 and equivalent to 70p in every £1 attempted; and
66% of authorised push payment fraud cases started online and 17% through telecommunications networks.
UK Finance is calling upon the government to ensure all sectors are accountable in preventing fraud as part of its upcoming fraud strategy.
HM Treasury publishes strategy for future retail payments infrastructure
On 7 November 2025, HM Treasury published the Payments Vision Delivery Committee's (PVDC) strategy for a future retail payments infrastructure.
Established by HM Treasury to enhance regulatory co-ordination and drive implementation of key activities, the PVDC's strategy is based on the three pillars of the National Payments Vision: innovation; competition and security, and set around five high-level strategic outcomes relating to:
Wider choice of innovative and cost-effective payment options.
Seamless payments within a diverse multi-money ecosystem, including interoperability between new and existing forms of digital money.
Trust that payments are protected from fraud and other financial crime.
Providing participant firms with fair, transparent and non-discriminatory access to the infrastructure to increase competition and innovation.
An operationally and financially resilient payments ecosystem.
Delivery of the new infrastructure will be a multi-year project, with HM Treasury, the FCA and PRA closely co-ordinating to bring it to life. The Retail Payments Infrastructure Board will lead design and delivery oversight of the new retail payments infrastructure in line with the strategy.
Consumer finance
FCA consults on motor finance compensation scheme
On 7 October 2025, the FCA published a consultation paper (CP25/27) on its proposals for an industry-wide compensation scheme for motor finance customers who were treated unfairly.
The consultation follows the Supreme Court judgment in Johnson v FirstRand Bank Ltd, Wrench v FirstRand Bank Ltd and Hopcraft v Close Brothers Ltd [2025] UKSC 33 (August 2025). Among other things, the Supreme Court examined the unfair relationship provisions in section 140A of the Consumer Credit Act 1974 (CCA), upholding one customer's unfair relationship claim.
In another judgment, the High Court ruled that the Financial Ombudsman was entitled to find that a dealer and lender did not adequately disclose a discretionary commission arrangement (DCA) and that meant the relationship between the lender and the borrower was unfair.
The FCA is proposing a compensation scheme as inadequate disclosure means consumers were unable to make informed decisions and less likely to negotiate or shop around. Consequently, many may have overpaid on car finance. In the light of the judgments, the FCA states that there is now sufficient legal clarity to move ahead with a compensation scheme.
The FCA also released a consultation paper on extending the time firms have to provide a final response to motor finance complaints until 31 July 2026. It will confirm, by 4 December 2025, whether it will extend the deadline for motor finance firms to provide a final response to customer complaints. The consultation closed on 18 November 2025.
If the FCA does introduce a compensation scheme, it will publish a policy statement and final rules by early 2026. The scheme would launch at the same time, with consumers starting to receive compensation before the end of 2026.
FCA Dear CEO letter to CMCs involved in motor finance commission claims
On 8 October 2025, the FCA published a Dear CEO letter sent to claims management companies (CMCs) setting out its expectations for those involved in motor finance commission claims that may be within the scope of its proposed compensation scheme for motor finance customers who were treated unfairly (CP25/27).
Areas addressed by the FCA include the following:
Pre-contract disclosure. Some firms are failing to comply with requirements in CMCOB 4.3.1R, which relate to the need to obtain a signed statement confirming customers understand they can make claims independently, not just through a CMC.
Multiple representation. If a firm discovers a customer is already represented, they should promptly engage with the customer and stop acting if that is what the customer instructs.
Contract termination. The FCA remains concerned that termination fees are excessive and expects firms to put this right.
Representing customers participating in the redress scheme. Firms should familiarise themselves with the scope of the scheme and should not place undue burden on respondent firms (including requesting excessive information).
Misleading statements. The FCA refers to its July 2025 letter sent to firms warning them to ensure that their financial promotions comply with the consumer duty and its rules for CMCs.
The FCA requests firms to engage with it promptly if they identify any issues that require investigation or remediation and reminds firms of the requirements under SUP 15 to report material breaches.
FCA Dear CEO letter to motor finance firms on commission redress scheme
On 8 October 2025, the FCA published a Dear CEO letter sent to firms involved in motor finance lending and broking since 2007, outlining its expectations in the light of its proposed compensation scheme for motor finance customers who may have been treated unfairly (CP25/27).
The FCA requests that lenders and brokers engage in an open and co-operative way and promptly notify it of anything that could materially affect their ability to meet their obligations.
FCA publishes FAQs on motor finance consumer redress scheme consultation
On 15 October 2025, the FCA provided an update on its consultation paper on the motor finance consumer redress scheme (CP25/27) to include FAQs. The FAQs have been published in response to queries received since the FCA announced the proposed redress scheme, and will be updated on an ongoing basis.
FCA launch data room for proposed motor finance compensation scheme
On 20 October 2025, the FCA announced that a data room has been created to provide controlled access to some of the underlying data relating to the consultation on a proposed compensation scheme for motor finance customers who may have been treated unfairly (CP25/27). Stakeholders who are skilled in reviewing large volumes of data and modelling can request access to the data room, for the limited purpose of understanding the FCA's analysis of loss and being able to respond meaningfully to CP25/27.
Stakeholders can request access to the data room by emailing the FCA using the contact details on the webpage. Individual firms must use their own data, rather than the data room, to calculate their redress liabilities.
FCA statement on progress and timing of motor finance compensation scheme consultation
The FCA published a statement on 5 November 2025 updating on progress and timing of its CP25/27 consultation on the proposed industry-wide compensation scheme.
It has extended the consultation deadline from 18 November 2025 to 12 December 2025 following industry feedback.
Final rules will now be published in February or March 2026 (rather than early 2026). The FCA will continue engaging with stakeholders during and after the consultation period before making final decisions.
The consultation on extending motor complaint response times (also part of CP25/27) closed on 4 November 2025. The FCA is considering responses and plans to publish final rules by 4 December 2025.
FSMA BNPL Order laid before Parliament
On 5 November 2025, the Financial Services and Markets Act 2000 (Regulated Activities etc) (Amendment) (No 2) Order 2025 was laid before Parliament and published with an explanatory memorandum. It will come into effect in early December 2025.
The order amends the Financial Services and Markets Act 2000 (Regulated Activities etc) (Amendment) Order 2025, which provides for certain buy now, pay later (BNPL) agreements to become regulated credit agreements with effect from 15 July 2026.
Usually, merchants introducing customers to regulated credit products will carry out the regulated activity of credit broking under article 36A of the RAO and must have regulatory approval, unless an exemption applies. Nearly all merchants brokering BNPL products are exempt from the regulatory requirements relating to credit broking due to a new provision, article 36FB, which was introduced by the 2025 order. However, domestic premises suppliers are excluded from this exemption due to historical concerns about pressure selling in customers' homes.
This exclusion has now been removed, following HM Treasury engagement with the FCA and industry. As a result, domestic premises suppliers will be exempt from credit broking regulation when they offer newly regulated BNPL products to their customers, bringing those suppliers in line with other merchants that offer these products.
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Regulatory law affects all businesses.
Osborne Clarke’s updated Regulatory Outlook provides you with high level summaries of important forthcoming regulatory developments to help in-house lawyers, compliance professionals and directors navigate the fast-moving business compliance landscape in the UK.
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Advertising and marketing
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Artificial intelligence
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Bribery, fraud and anti-money laundering
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Competition
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Consumer Law
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Cyber security
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Data law
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Digital regulation
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Employment, contingent workforce and immigration
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Environment
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Environmental, social and governance
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Fintech, digital assets, payments and consumer credit
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Food law
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Health and safety
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Modern slavery
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Products
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Telecoms
