As the fintech sector gears up for a busy year ahead, spring 2025 is proving to be a crucial period for regulatory developments in the UK. From data access and AI scrutiny to tackling financial fraud, regulatory bodies are making significant moves that will shape the industry’s landscape.
With consultations closing, legislative bills advancing, and new oversight mechanisms in the pipeline, we’ve pulled together an overview to help fintechs stay ahead of the curve to remain compliant and competitive.
Data (Use and Access) Bill: expanding smart data beyond finance
One of the most significant regulatory developments this season is the progress of the Data (Use and Access) Bill, which aims to expand smart data capabilities beyond open banking. The Bill, which had its second reading in Parliament on 12 February 2025, is currently under review by the House of Commons Public Bill Committee, which has issued a Call for Evidence (CfE) to gather industry perspectives before finalizing its recommendations.
The Bill’s Part 1 is of particular interest to fintechs, as it seeks to enhance data-sharing frameworks across multiple sectors, potentially creating new opportunities for financial services firms that rely on customer data insights. The Committee will hold its first meeting on 4 March 2025, with a final report expected by 18 March 2025. After this deadline, no further evidence will be accepted, emphasizing the urgency for fintechs and other stakeholders to contribute their views now.
For fintechs specializing in open finance, AI-driven financial products, and digital identity verification, this Bill represents a pivotal moment in shaping future business models.
By expanding data access across sectors, firms may find new use cases for fintech innovations, but they will also need to navigate enhanced data governance and compliance requirements.
AI in Financial Services: The FCA’s latest research on mortgage pricing
As artificial intelligence (AI) continues to transform financial services, the Financial Conduct Authority (FCA) is keeping a close eye on its implications. In its latest AI research series, the regulator published an analysis on mortgage pricing differences across demographic characteristics.
The study examined whether ethnicity, sex, sexual orientation, or health conditions influenced the pricing of mortgage products. While the FCA found no direct evidence of pricing discrimination, it observed variations in the types of mortgage products used by different groups. The regulator noted that while this does not necessarily indicate unfairness, the issue of ‘demand fairness’—the accessibility of certain products to different demographic groups—remains unresolved.
For fintechs leveraging AI for lending decisions, credit risk assessments, or automated underwriting, this signals a need for enhanced transparency. As regulatory scrutiny on algorithmic bias and fairness in financial services grows, fintech firms must ensure their AI models are robust, explainable, and compliant with the FCA’s evolving stance on responsible AI use.
Tackling Fraud: The PSR’s push for app scam reimbursements
Fraud prevention remains high on the regulatory agenda, particularly in the fight against authorised push payment (APP) scams. The Payment Systems Regulator (PSR) recently published a policy update outlining its next steps in implementing APP scam reimbursement requirements.
The regulator has announced plans to launch an April 2025 consultation on the regulation of Pay.UK’s reimbursement claims management system (RCMS). This move will standardize claim management and data reporting for APP scam victims, providing greater clarity on reimbursement processes. The PSR expects that any regulatory requirements will take effect by late 2025.
Read more about the APP fraud reimbursement protections | Payment Systems Regulator
For fintechs operating in payments, digital banking, and fraud prevention, this presents an opportunity to enhance security measures and collaborate with regulators on improved consumer protection mechanisms. The ongoing push to standardize APP scam compensation could also drive fintechs to adopt stronger authentication, risk assessment, and fraud detection tools.
What’s next for fintechs?
With these regulations and consultations in motion, fintechs must take proactive steps to align their operations with evolving requirements. Key actions include:
Engaging with the Data (Use and Access) Bill: Firms should submit evidence to the HoC Public Bill Committee before 18 March 2025 to help shape smart data policies that impact open finance.
Ensuring AI Fairness and Transparency: Fintechs utilizing AI for financial services must review their models for fairness, especially as the FCA continues its research into algorithmic impact.
Preparing for APP Scam Reimbursement Rules: Payments firms should anticipate compliance requirements and enhance fraud prevention mechanisms ahead of the PSR’s expected changes later this year.
With regulatory developments set to influence business models, compliance strategies, and consumer trust. Firms that stay ahead of these changes will be best positioned to capitalize on new opportunities while mitigating regulatory risks. We're here if you need us.
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