The FCA was represented by Sheree Howard, Executive Director of Authorisations, supported by senior colleagues from its Authorisations, Innovation and Legal teams, including Katherine Browne, Head of Department for Authorisations. To represent industry, we invited a cross-section of senior management of firms and advisers from our clients and network, spanning consumer credit, motor finance, retail credit, wealth and investment management, principal firms, fintech accelerators and professional services.

The discussion was wide-ranging, but for consumer credit firms there were some important signals. Reflections from the discussion are set out below.

1. The “growth agenda” is real, but not a free pass

The clearest message was that the FCA continues to actively consider how regulation can support growth, but that does not mean lower standards. It does mean the regulator is thinking harder about where regulatory friction is justified, where it may be disproportionate, and how credible firms can be supported to enter or scale in the market.

A particularly interesting example was work on a temporary permissions or provisional licence regime. The concept is at an early stage, but the direction of travel matters: controlled, time limited access to FCA permissions could help new entrants overcome the familiar “chicken and egg” problem of needing investment to become authorised but needing regulatory certainty to attract investment.

The authorisations process is already improving, though consistency of expectations, particularly for newly authorised firms entering established markets, was raised as a point of feedback. One participant confirmed their firm had recently been authorised within 28 days of submission of their application… surely a Guinness World Record!

2. Consumer credit remains central to the FCA’s policy agenda

Consumer credit featured prominently throughout the discussions, and rightly so. The consumer credit market is the largest in terms of number of FCA authorised firms. The FCA’s objective is markets that work well, firms that can innovate and grow, and consumers who can access products that meet their needs. On the ground that is complicated to achieve: cost of living pressures, vulnerability, indebtedness, complaints and large-scale remediation in some segments combined mean that many consumers are currently locked out of suitable credit and firms are not well supported to serve them.

This raises the question as to how regulation can enable responsible firms to serve customers sustainably, including those who might otherwise turn to illegal moneylenders or unsuitable products.

There are no silver bullets, but there are real opportunities for quick wins. Better communication with smaller firms, improved FCA institutional memory about individual businesses, reform of outdated law and modernisation of the redress framework would all play a part in helping to create better conditions for investment and giving firms greater confidence in managing regulatory risk.

3. Regulatory certainty matters as much as regulatory flexibility

Outcomes-based regulation is attractive where it avoids prescriptive rules that do not fit every business model, but in practice smaller firms often need clear parameters within which to operate. The FCA acknowledged this is a point it hears regularly but reiterated its focus on outcomes and “fewer rules”.

Consumer Credit Act reform was flagged as a major opportunity, but one where certainty and flexibility must be carefully balanced. Participants suggested that more guidance, examples of good and poor practice, and better post-authorisation support would be crucial, particularly for smaller firms.

4. DPC (BNPL) regulation shines a spotlight on the challenges of financial exclusion

Several attendees raised concerns that deferred payment credit regulation may increase financial exclusion without alternative credit to fill the gap. As a counterpoint, the FCA shared examples, heard from consumer groups earlier in the day, of vulnerable, low-income consumers holding large numbers of concurrent DPC agreements, illustrating why intervention has been necessary.

Consumer protection and financial inclusion are not competing objectives, but they do require careful balancing. Mutuals and community-based lenders are close to the communities they serve and may be well placed to support customers underserved by mainstream credit, but many are in need of support themselves.

One participant made the valid point that the current credit broking perimeter can make it harder for not-for-profit lenders to work with retailers than for DPC firms.

5. Engage with the FCA Innovation Department

The FCA’s Innovation Services were discussed, including ongoing work the FCA is doing to make anonymised Product Sales Data available for testing within the Digital Sandbox. Some participants noted it is not always obvious where an idea fits within the FCA’s Innovation Services, which can reduce take-up. The message back to industry was clear: have a conversation with the Innovation Department and they will help you find the right support.

As the FCA pursues its growth objective and reforms key areas of regulation, ongoing engagement between regulator and industry will remain essential. The FCA team was enthusiastic, engaged and there to listen. Neither industry nor the regulator has all the answers, but dialogue is the best way to identify where regulation is working and where there is scope to improve outcomes for firms and consumers alike. We look forward to continuing to be a part of the discussion.