UK retailers offering financial products are entering a period of closer regulatory scrutiny as the Financial Conduct Authority (FCA) increases its focus on customer outcomes, fraud prevention and digital finance.
The regulator’s Annual Work Programme for 2026/27, published in March 2026, outlines how the FCA plans to support economic growth while tightening standards across consumer finance and payments.
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For retailers, the changes matter because financial services are now deeply connected to modern shopping. Many retailers offer instalment payments, loyalty-linked credit, insurance products, digital wallets or embedded finance tools through partnerships with banks and fintech providers.
The FCA’s latest plans suggest the UK remains supportive of innovation, but firms will face greater pressure to prove they are treating customers fairly and managing risks properly.
Consumer Duty remains a major focus
One of the biggest issues for retailers is the FCA’s continued focus on Consumer Duty rules.
Consumer Duty requires firms to deliver good outcomes for customers rather than simply meeting minimum compliance requirements. The FCA has made clear it expects businesses to look closely at how products are designed, sold and supported.
For retailers, this means greater attention on areas such as:
- Clear customer communication
- Transparent pricing
- Fair lending checks
- Complaint handling
- Support for vulnerable customers
- Digital checkout journeys
Retailers working with third-party lenders or payment providers may also face increased pressure to monitor how those partnerships affect customer outcomes.
The FCA has confirmed that buy now pay later services will come under formal regulation from July 2026. This will introduce new affordability and compliance requirements across the sector.
Many retailers rely heavily on buy now pay later options to support online sales. As regulation increases, businesses may need to review customer journeys, finance partnerships and internal compliance processes.
Embedded finance continues to grow
Despite tougher oversight, the FCA continues to support innovation in financial services.
The regulator plans further work on open banking, open finance and digital payment systems. This is positive news for retailers investing in embedded finance, where financial services are built directly into the shopping experience.
Embedded finance is becoming increasingly common across ecommerce and digital retail. Customers can now access credit, insurance and payment services without leaving a retailer’s website or app.
Retailers see this as a way to improve customer convenience, increase loyalty and create new revenue opportunities.
The FCA’s approach suggests these models can continue to grow in the UK market, provided firms maintain strong safeguards around customer protection and data use.
At the same time, the regulator is increasing its use of technology and artificial intelligence to monitor firms and detect risks more quickly.
This could lead to faster identification of problems linked to customer harm, fraud or poor operational controls.
Fraud and operational resilience move higher up the agenda
Financial crime prevention is another major priority in the FCA’s 2026/27 programme.
The regulator plans to strengthen fraud detection and increase scrutiny of anti-money laundering controls and payment security.
For retailers involved in payments or financial services, this may increase expectations around:
- Fraud monitoring
- Customer identity checks
- Cybersecurity
- Third-party oversight
- Data protection
- Operational resilience
As financial services become more integrated into retail operations, regulators are paying closer attention to how businesses manage risk across their wider supply chains and technology systems.
The FCA’s latest programme reflects a broader shift in regulation. The regulator wants to encourage innovation and growth, but it also expects firms to demonstrate stronger accountability and better customer protection.
For retailers, financial services remain an important growth opportunity. However, firms entering this space may need to invest more heavily in governance, compliance and operational controls as regulatory expectations continue to rise.
