Consumer Credit Product Sales Data Forms

The Financial Conduct Authority (FCA) has made changes to the new consumer credit forms PSD008, PSD008a and PSD009. All the recent amendments will be included in the Whistlebrook regulatory product, WIRES.

Changes to Regulatory Reporting

The FCA consulted on changes to some of its regulatory returns. Readers are encouraged to review consultation paper 25-16. This paper can be found in https://www.fca.org.uk/publication/consultation/cp25-16.pdf

The proposed alterations, when applied to Whistlebrook’s regulatory software, will mean that:

• REP022 ‘General Insurance Pricing Attestation’ and ‘RIA Complaints’ will be withdrawn
• REP009 ‘Consumer Buy to Let’ frequency of submission will be reduced from quarterly to annually
• REP008 ‘Disciplinary Action’ will no longer have a nil return requirement. If there are no breaches, then nothing will need to be reported.

International Firms

The Prudential Regulation Authority’s (PRA) policy statement 6-25 (a follow up to the consultation paper 11-24) was issued and provides an update of the regulator’s supervisory expectations on branches and subsidiaries of firms that are headquartered outside the UK.

From Q2 of 2025, a new threshold that will influence whether an entity is regulated as a branch or subsidiary, is introduced. The threshold for FSCS protected and unprotected retail and small company demand deposits, is set at GBP 300million.

In addition, the following thresholds are changing:

• All FSCS protected deposits is raised from GBP 500million to GBP 650million.
• FSCS protected retail and small company demand deposits GBP 100million is raised to GBP130million.

Changes to the Branch return will be introduced from 1^st March 2026. The template will be revised such that it includes more information on deposits and liquidity. Whistlebrook’s regulatory software will be updated accordingly.

SME and Infrastructure Lending Adjustments

PRA policy statement 7-25 explains the response to the removal of the SME and Infrastructure Supporting Factors, when Basel 3.1 is implemented in the UK. The aim of these lending adjustments is to ensure that for these exposures, under Basel 3.1, the overall capital requirement will not be greater than is required prior to that regulation taking effect. The adjustments will be firm specific, affect an entity’s Pillar 2A capital and be effective from the Basel 3.1 start date (currently 1^st January 2027).

Institutions that are to be subject to the Small Domestic Deposit Takers Regime will be unaffected by these lending adjustments. The capital requirements for SDDT regulated organisations are expected to be finalised in Q4 of 2025.

Firms that have SME and / or infrastructure exposures and wish to receive a Pillar 2A capital adjustment, will be required to submit data.  There are three templates that will be used to collect the information. These templates can be found within the policy statement. The data are to be provided for the start of Basel 3.1 and at each ICAAP submission, thereafter. The regulator will use the figures received to calculate the appropriate adjustments to a firm’s Pillar 2A capital.

Review of Pillar 2A Capital Methodologies

PRA consultation paper 12-25 proposes changes to the way in which Pillar 2A capital is calculated. The proposal is relevant to firms that will be subject to Basel 3.1 and to those that will be under the rules of the Small Domestic Deposit Takers Regime (SDDT). The main change is to the Pillar 2A add-on for credit risk.

Sovereign and Central Bank Exposures

For exposures to central, regional and local governments and central banks, a new method to calculate the add-on is to be introduced. This method will replace comparison of the risk weighted amount under the standardised approach to credit risk, versus a portfolio benchmark according to the Internal Ratings Based methodology.

The reason for this change is that Internal Models will not be permitted with the aforementioned exposures under Basel 3.1.

For non-UK exposures to central banks and sovereigns, minimum effective risk weights will be introduced. Where the weights exceed those in Pillar 1, the excesses will form part of a Pillar 2A add-on.

Unconditionally Cancellable Commitments

Under the standardised approach to credit risk, the Pillar 2A add-on for these exposures will be subject to an additional 10% conversion factor. It is understood that a firm will be able to challenge that level, but must justify a lower conversion factor.

These changes will apply from the date when a firm’s Supervisory Review and Evaluation process is conducted after Basel 3.1 is implemented

Reporting

Pillar 2 related reporting will be affected by the proposal:

• FSA077 and FSA082 will be withdrawn
• FSA076 and FSA081* are expected to reduce in size

*Effective from 2 March 2026. Other changes will be from 1^st January 2027.

Mortgage Rule Review

The FCA issued Discussion Paper 25-2 on revising the mortgage rules. Whistlebrook understands that a goal of the regulator is to make home ownership more widely available. The paper seeks responses on various ideas that the regulator highlights for consideration. Of note for discussion, are the following points made in the paper.

 

UK Government	A preference of the Government is for more risk to be in the mortgage market, in the belief that through greater access for borrowers, economic growth will benefit. A risk that may accompany that preference is a fueling of house price inflation. It is understood that the FCA is working with the Government to appreciate fully, the relationship between mortgage market rule changes and the housing supply policy.
Affordability Testing	·        A change to the rate movement or to the term the determines if the test is required. ·        Historic proof of rental payments (where they exceed the expected mortgage cost) may be considered sufficient proof of affordability. It may be that some stakeholders see this method as useful, where a potential borrower doesn’t have traditional permanent employment and so income is variable. Individuals that are professional contractors or self-employed, may fall into that category and not have comparable access to mortgages relative to their peers.
Product Innovation	·        Revise the rules so that mortgage products are more representative of lifestyles – e.g. products that give more choice in how retired individuals can access equity in their property; an increase in availability of interest only mortgages for part of a term or at the borrower’s request so that there is flexibility. ·        Tailoring of mortgage products to different professions, hence taking account of expected career average earnings.
Climate Change	The paper highlights the difficulty of a borrower having a mortgage secured on a flooded property. The challenge is in switching to get a better deal. Perhaps a change to the rules, may help an increasing number of borrowers in that position.

 

Financial Regulatory Regime for CryptoAssets

The FCA issued two consultation papers 25-14 and 25-15 on stablecoin linked to a single fiat currency. Included in the consultation are requirements for liquidity, capital and the asset pool (‘backing assets’ that ensure redemption can be made at par) that supports a stablecoin issue.

The proposed regulation for an issuer of stablecoin will require that the backing assets are highly liquid, with at least 5% in short term cash deposits.

WIRES Releases

Release 7.1 is at a planning stage, but it is anticipated that it will have a delivery in quarter four of 2025.

 

Version	Content	Expected Availability
7.1	To be confirmed	Q4 2025

This regulatory update is Whistlebrook’s understanding of the position as at 27th June 2025.