How the FCA Assesses Consumer Credit Firms After the Festive Period
January is one of the most revealing months in the regulatory calendar for consumer credit firms. While December is often dominated by volume, marketing and operational pressure, January is where the consequences surface. Arrears increase, complaints rise, vulnerability becomes more visible, and systems that looked adequate a few weeks earlier are suddenly tested under strain.
For the Financial Conduct Authority (FCA), this period is not an anomaly. It is a predictable risk point, and one the regulator increasingly uses to assess whether firms are genuinely delivering good outcomes under the Consumer Duty, or merely complying on paper.
This blog explores how the FCA typically views January performance, the signals it looks for, and what lenders, brokers and credit intermediaries should be prepared to evidence.
Why January matters so much to the FCA
From a regulatory perspective, January combines three factors that rarely align so clearly at any other time of year.
First, consumer financial pressure intensifies. Customers often enter January having relied more heavily on credit in the preceding months, whether through cards, BNPL arrangements, catalogue credit or short-term borrowing. Disposable income tightens, and even minor financial shocks can push previously stable customers into difficulty.
Second, arrears and repayment stress tend to emerge quickly. Early missed payments, requests for extensions, and contact from customers seeking help all increase. For the FCA, this is a key indicator of how well a firm’s affordability assessments, monitoring and support mechanisms are functioning in practice.
Third, vulnerability becomes more visible. Emotional stress, health issues, financial anxiety and disrupted routines frequently overlap in January. The FCA expects firms to recognise this shift and adapt their approach accordingly, particularly in customer communications, collections and complaints handling.
Because all of this is foreseeable, the FCA views January outcomes as a test of preparation rather than reaction.
What the FCA looks at first
When supervisory teams assess firms in the early part of the year, they are rarely starting from scratch. They will already have a picture built from regulatory returns, complaints data, previous supervisory interactions and market intelligence. January performance either reinforces or undermines that picture.
A key focus is outcomes, not intentions. The FCA will want to understand how customers are actually experiencing the firm during this period. That includes looking at early arrears data, patterns in missed payments, and how quickly customers are able to access support when they need it.
Consumer Duty has sharpened this focus considerably. Firms are now expected to demonstrate that their products continue to deliver fair value even when customers are under strain, and that support mechanisms work effectively in real-world conditions.
Another important area is management information. January often exposes weaknesses in MI frameworks, particularly where data is delayed, overly aggregated or not reviewed with sufficient challenge. The FCA increasingly treats weak MI as a governance issue in its own right, especially if it prevents senior management from identifying emerging harm.
Affordability, creditworthiness and repeat borrowing
Affordability assessments are a recurring theme in FCA supervision, and January is where their robustness is most clearly tested. The regulator understands that no assessment can predict every future change in circumstances, but it does expect firms to have assessed affordability in a way that reflects realistic consumer behaviour.
Where customers move into difficulty shortly after borrowing, the FCA may question whether assessments were appropriately conservative, particularly for repeat borrowers or customers using multiple products. Firms that rely heavily on automated decisioning may face additional scrutiny around how models account for short-term financial volatility.
Credit brokers and intermediaries are not immune here. The FCA expects brokers to have a clear understanding of the products they introduce and to avoid presenting credit as a solution to short-term financial stress without appropriate context or safeguards.
Vulnerability and support in practice
January is also when the FCA pays close attention to how firms identify and respond to vulnerability. Policies and frameworks matter, but what matters more is how those frameworks operate when demand increases.
The regulator will expect to see that customers can easily find information about support, that staff are trained to recognise signs of vulnerability, and that escalation routes work smoothly. Digital journeys are a particular area of interest, as customers under stress may struggle to navigate complex online processes.
Firms that make it difficult for customers to access help, or that rely too heavily on rigid processes, risk falling short of the Duty’s requirement to act in customers’ best interests.