The FCA have published several communications this month, each relevant to pawnbrokers, we recommend you take time to read and consider the content and complete any updates you see appropriate for your business.
FCA Publication - Regulatory Priorities: Consumer Finance
The FCA are replacing their portfolio letters by issuing an annual report, which sets out the key issues they will focus on for the coming year and what this means for firms in our marketplace. On the link above you can read what the FCA will be focusing on. We have seen an increased emphasis on supervision, and of course the Consumer Duty. Our guidance remains consistent, if the FCA were to make contact with your company today, would you have the appropriate evidence in place to share with the regulator if requested.
In summary, do you have good oversight of your customers, appropriate monitoring actions and outcomes in place, and if you identify an area that requires improvement, can you evidence any changes completed.
FCA Consumer understanding: good practice and areas for improvement - Consumer understanding: good practice and areas for improvement | FCA
On 13th March 2026 the FCA published good and poor practice examples into how firms are working to improve consumer understanding of financial products and services, under the Consumer Duty. The report highlights positive steps firms have taken to improve the way they design, test and monitor communications so customers can make effective, informed decisions.
The FCA stated that for smaller firms, “We expect all firms to deliver good outcomes for their retail customers, no matter the size of the firm. Governance, monitoring and testing should be proportionate to the size and scale of business”. We recommend that you read the link above to consider any of the recommendations made by the FCA.
Redress System
On the 15th March 2026 the Financial Ombudsman and Financial Conduct Authority have announced the planned next steps in reforming the redress system, alongside the Government’s proposals for legislation and other measures. FOS issued the following information:
- The Financial Ombudsman Service and the Financial Conduct Authority (FCA) are strengthening the redress system so consumers get fair and quick compensation when things go wrong, and businesses have more certainty to invest, grow and compete.
- Reforms being delivered now, ahead of later planned legislative changes, will help firms address and resolve customer issues more effectively and proactively, escalate major or emerging redress issues earlier, and speed up complaint resolution.
- The Financial Ombudsman Service will continue to operate independently, making decisions that are fair and reasonable in individual cases, better aligned to regulatory rules.
Following feedback from industry and consumer groups, the Financial Ombudsman and FCA have outlined the next steps on their joint work to modernise the redress system. Key changes being proposed include:
- A new registration stage to ensure that complaints referred to the Financial Ombudsman are within its scope and ready to be investigated before being allocated to a caseworker.
- New powers to dismiss complaints that are best resolved in other ways, are more appropriate for courts or another dispute resolution process, or where there has been no material financial loss, distress or inconvenience.
- Adapting the current ‘fair and reasonable’ test the Financial Ombudsman applies when considering a complaint to improve clarity, regulatory alignment.
The changes come alongside wider government proposals on reforming the Financial Ombudsman, and mark a significant step in the delivery of a strengthened redress system which is transparent, robust, and fair to all parties in today’s evolving financial landscape.
Complaint Communications
We have been made aware that a small number of complaints received by our members may have been generated by AI. Each of the complaints (amongst other points), includes credit worthiness assessment concerns and ignores CONC 5.2A and the controls that our members have in place.
Below is an example from Gemini AI which is an online tool, capable generating and writing content;
“Based on data from the Financial Ombudsman Service (FOS) and industry reports, complaints regarding pawnbroking are generally low in volume compared to other financial products but centre on the affordability of the loans.”
As a consequence this generates a complaint referring to vulnerability. If you do receive AI generated complaints relating to affordability and/or vulnerability and need guidance on how to respond please contact the NPA.