What Senior Managers Need to Know About the FCA’s Next Phase of Oversight
Digital lending is no longer a specialist corner of consumer credit — it is becoming the default. Customers expect rapid access, frictionless onboarding and decisions delivered in seconds rather than hours. For firms, this shift offers scale, efficiency and competitive advantage. But for the FCA, it also introduces new forms of risk: risk embedded in models, buried in automated journeys or dispersed across third-party distributors.
What has become clear across the FCA’s 2025 activity is that digital lending now sits firmly within the regulator’s supervisory spotlight. For Boards and senior leadership teams, this requires more than operational adjustments. It demands a shift in mindset about governance, accountability and the risks inherent in automation.
Digital lending is now a Board issue, not just a compliance issue
One of the strongest messages from the FCA this year is that senior leaders must be able to explain — and stand behind — the digital tools their firms use. That includes:
- How models make decisions
- What data drives them
- How digital journeys influence behaviour
- How customers understand the choices presented
- Where vulnerability may be missed
- How distribution partners present the firm’s products
This is not abstract. The FCA is increasingly asking Boards to evidence their understanding of digital processes and their oversight of them. Senior leaders cannot rely on assurances that “the model works” or “tech have checked it”. The FCA expects demonstrable challenge.
Digital conduct risk is now an integral part of the firm’s overall risk profile. Senior Managers must treat it with the same seriousness as credit risk, operational resilience or liquidity management.
Why digital models concern the FCA — and why Senior Managers should care
The main regulatory anxiety is not the technology itself. It is the possibility that decisions are being made at scale without sufficient scrutiny or understanding. Automated decisioning amplifies outcomes — good and bad.
For Senior Managers, the risks fall into three areas:
Governance risk
If the firm cannot explain a model, it cannot control it. And if it cannot control it, the FCA views that as a failure of governance — not technology.
Conduct risk
Misjudged nudges, unclear disclosures or biased model outcomes can lead to large-scale harm before anyone notices. That quickly becomes an enforcement issue.
Reputational risk
Customers who feel misled in digital journeys tend to vocalise concerns online. A model that “gets it wrong” for vulnerable customers can cause reputational damage that moves faster than regulators.
The Senior Manager lens is simple: if automation scales a process, it also scales the consequences of failure.
Digital customer journeys demand more than good UX
Boards often think of digital journeys in terms of usability, customer satisfaction or conversion rates. But the FCA views them through a very different frame: does the digital journey help the customer make an informed decision?
The regulator has repeatedly highlighted concerns about:
- Pre-approval messaging that gives false comfort
- Interfaces that subtly push customers toward higher credit amounts
- Disclosures timed too late or presented too lightly
- Customers struggling to find human support when needed
- Vulnerable individuals falling through digital gaps
For Boards, the challenge is to ensure the customer’s digital experience genuinely supports understanding — and that the firm can prove this through monitoring, testing and MI.
Financial promotions: the fastest-moving risk for digital lenders
Digital advertising moves quickly — often too quickly for traditional oversight frameworks. Automated optimisation tools, dynamic content, personalised messaging and large affiliate networks can create compliant and non-compliant adverts in the same afternoon.
Senior Managers should assume:
- If a promotion can evolve, it can drift out of compliance
- If an affiliate can create content, they can create harm
- If a platform uses algorithmic optimisation, the FCA will expect oversight
Financial promotions remain a primary driver of FCA intervention. In the digital lending context, they are also a prime source of reputational risk.
The hidden vulnerability challenge
Digital environments can obscure vulnerability. The customer who hesitates in a branch or raises a concern verbally might click through an online journey without indicating they need support.
The FCA expects firms to integrate vulnerability detection into digital pathways — and to offer clear “off-ramps” into human assistance. This is an area where Boards should expect increasing scrutiny, particularly where firms deal with customers on the margins of affordability.
Where Boards should focus over the next 12 months
A Senior Manager approach should revolve around five priorities:
- Model governance
Boards should demand clear, non-technical explanations of model logic, testing, bias monitoring and decision drivers — and documented evidence of challenge.
- Digital journey testing
Senior leaders should see real customer journey analysis, including points of misunderstanding, confusion or friction.
- Promotions and distribution oversight
Boards should ensure that any channel capable of generating or modifying promotions is covered by a robust monitoring framework
- MI that reflects digital risk
MI must go beyond numbers and include outcome indicators across different customer types, channels and vulnerability categories.
- Accountability and decision-making
Digital conduct risk must appear in governance minutes, risk committee papers and Board packs — with clear actions and ownership.
How ALPH supports Senior Managers navigating digital lending challenges
ALPH Legal & Compliance works with Boards and senior leadership teams to translate technical and regulatory expectations into clear governance actions. This includes:
- Board-level briefings on digital conduct risk
- Independent reviews of decisioning models and oversight frameworks
- Digital customer journey mapping and outcomes testing
- Financial promotions oversight across digital and affiliate channels
- Distribution governance reviews
- Vulnerability strategy assessments for digital environments
Digital lending will continue to expand and innovate. But the FCA’s expectations are clear: innovation must be matched by governance. For Senior Managers, the question is not whether digital credit will face scrutiny — it’s whether the firm is genuinely ready for it.
ALPH Legal & Compliance can assist with all aspects of your business’s compliance needs, whether that be compliance structure and policy, internal/external audit, business and regulatory change support, authorisation, supervision or just some general expert advice and guidance!
Take action now with ALPH Legal & Compliance services!
With all the regulatory shifts on the horizon, now is the time to act. Don’t wait until compliance gaps appear—engage with ALPH Legal & Compliance today to ensure your firm is ahead of the curve. Whether you need tailored guidance, compliance support, or strategic insights to drive new business, ALPH Legal & Compliance is your trusted partner in navigating FCA regulations with confidence.
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