On 23 March 2026, the Financial Conduct Authority (FCA) published a statement which highlights risks when dealing with unregulated lenders.

Summary

The FCA set out that it is reminding regulated firms that they need to undertake proper checks when dealing with unregulated lenders, safe custody providers, money brokers and financial leasing companies, also known as ‘Annex 1’ firms.

The FCA has highlighted, in particular, that:

  • FCA powers are currently limited to looking at how these firms are meeting their anti-money laundering obligations and these firms are not subject to the wider FCA Handbook, that this regime is based on registration and is different from the authorisation regime under the Financial Services and Markets Act 2000, and that customers of Annex 1 firms are not able to access the Financial Ombudsman Service (FOS).  
  • When dealing with Annex 1 firms, FCA regulated firms must do their due diligence to understand the firm’s business, including seeking direct confirmation from the firm of their registration status, conducting independent checks of the information they provide, and understanding and managing any risks.  
  • The FCA will continue its proactive and reactive work in relation to the anti-money laundering standards observed by Annex 1 businesses.  
  • In some cases, consumers have been encouraged to set up limited companies to access lending from Annex 1 firms and, in such cases, it is important these consumers understand they will not have access to the FOS if things go wrong.