The Future of Debt Collection and Arrears Management in the UK: Five Trends Shaping 2026

The Future of Debt Collection in the UK: Five Trends Shaping 2026

We’re two months into 2026, and one thing is already obvious: The definition of effective UK debt collection and arrears management is changing faster than many operating models can keep up with.

However, some organisations still treat collections as a back-office function whose job is to focus primarily on cash recovery and being productive. In today’s regulatory and customer focused environment, this approach carries increasing risk. For some time now the FCA’s direction of travel has been outcome-based and customer expectations are mirroring these regulatory expectations. And the data suggests that financial stress and disputes aren’t exactly fading into the background.

The reality is clear: 2026 will expose gaps between what firms say they do for customers in difficulty and what their processes actually deliver.

Here are five trends shaping debt collection in 2026 — and the awkward questions they force all of us to answer.

FCA Consumer Duty in UK Collections Is Now About Proof, Not Paperwork

After Consumer Duty came into force in July 2023, the remainder of that year — and much of 2024 — focused on implementation.

Moving into 2025 and now 2026, the FCA’s emphasis has shifted to whether Consumer Duty is fully embedded and habitual — particularly whether firms can evidence good outcomes, not merely assert them.

The uncomfortable implication is this: if you can’t measure outcomes, you can’t credibly claim you’re delivering them. And if you can’t explain why a customer was placed on, and experienced, a particular treatment path or customer journey, especially where vulnerable customers or affordability assessments are involved, you’ll struggle to defend decisions when complaints land.

So, what does “proof” actually look like in FCA Consumer Duty collections and UK arrears management in 2026:

BNPL Regulation UK 2026: What It Means for Arrears Management and Complaints

The FCA has confirmed that BNPL will be regulated from 15 July 2026, bringing stronger protections and shifting how the market is supervised. The introduction of regulation reflects growing recognition that BNPL products require the same standards of affordability, governance, and customer protection as other forms of consumer credit. As a result, the calls for regulation were getting ever louder with the FCA finally acting, with the result that BNPL products will soon be moving into a world of clearer obligations, stronger consumer protections, and a larger complaint surface area.

• Outcome KPI sets that go beyond cure-rate: sustainability of arrangements, repeat delinquency, vulnerability outcomes, and root-cause fixes.
• Quantifiable feedback from customers who are in, or who have been in, arrears
• QA that tests for customer outcomes (not just script adherence).
• Audit trails that explain why a decision was made — including exceptions and overrides.

For collections teams operating in this particular product line the practical impact is:

• Higher expectations for affordability, customer communications, and support.

• Greater focus on complaint handling and escalation routes.

• Increased demand for evidence when customers dispute outcomes.

For those, currently unregulated, BNPL firms preparing for the new regime the big question is “Do your collections and complaints processes treat BNPL-origin arrears with the same discipline as regulated consumer credit?" If the answer to this question now, is not definitive, then there is less than five months to ensure that you have put in place the processes and controls that will enable you to demonstrate compliance with the new requirements. There is still time for you to close the gap or the regulator and/or ombudsman will close it for you.

Financial stress is real — even if arrears aren’t exploding

While the late-2025 data tells a nuanced story it is clear that the UK consumer continues to demonstrate significant resilience in the face of continued financial headwinds

UK Finance reported that in Q4 2025:

• 80,490 homeowner mortgages were in arrears of 2.5%+ of balance (about 0.92% of all homeowner mortgages).
• 1,210 homeowner possessions took place in the quarter.

So, while mortgage arrears are not dominating headlines, pressure on consumers hasn’t disappeared. The Bank of England’s Money and Credit release shows £1.5bn net consumer credit borrowing in December 2025. This total was composed of £0.7 billion in net credit card borrowing and £0.8 billion through other forms of consumer credit, such as personal loans and car dealership finance.

Meanwhile, Citizens Advice reports it helped 407,416 people with debt problems during 2025 — a reminder that financial difficulty is still widespread even when headline arrears look manageable.

This combination — relatively contained headline arrears, but persistent consumer credit pressure and advice demand is exactly what creates collections risk: customers who are fragile, volatile, and more likely to fall over after agreeing.

If your strategy assumes that a promise-to-pay equals a sustainable solution and a good outcome for your customer, 2026 is likely to correct that assumption very quickly.

Open Banking in UK Collections: Enabling Personalised and Sustainable Arrears Support

Open Banking is no longer an innovation lab topic and adoption has moved firmly into the mainstream.

The FCA has highlighted that there are more than 16 million users benefiting from open banking, with Open Banking payments up 53% year-on-year and variable recurring payments (VRPs) now representing 16% of Open Banking transactions.

This matters for collections because it enables a practical shift:

• Better affordability assessments moving from “tell me your situation” to permissioned evidence of affordability and cashflow.
• Allowing for the development of treatment paths that are based on timing and amounts that match real income cycles.
• Delivering personalised, sustainable arrangements aligned to income timing (not just standard monthly cycles)

In other words: open banking is a direct route to the better outcome that regulators keep asking for — support that actually works.

Rising complaints reinforce the need for integrated and aligned customer journeys

When complaints rise there is sometimes a tendency for firms to blame “customer behaviour,” “economic pressures,” or “claims culture.”

The Financial Ombudsman Service (FOS) recorded 305,726 new complaints in 2024/25 (the highest level for six years) an increase of 54% on the previous year. The overall rate of upheld complaints across all products was 34%. Credit cards alone generated 60,364 complaints, with issues including affordability and customer service.

Not all complaints are “collections complaints,” of course but many stem from the same underlying causes: affordability, communication, service quality, and whether the customer experience feels fair. Unfortunately, the underlying FOS data for Collections is not particularly rich, with just one specific entry (see table below) but what it does evidence is that while total complaints rose by 54% YoY, Debt Collection specific cases rose by 62%.

That’s not just noise. It’s a signal that:

• Customers are more willing to challenge outcomes.
• Weaknesses in affordability, communications, and service journeys surface fast.

And the practical implication of all of this for 2026 is that collections, customer service, complaints, and risk must operate as one system. If they don’t, you’ll see it in escalations and cost.

The Opportunity for UK Debt Collection and Arrears Management in 2026

The firms that perform best this year will build operating models that treat collections as a customer outcome journey — not a series of contact attempts.

This is exactly where an end-to-end, technology-led managed service — with outcomes as the organising principle — delivers value:

• It standardises and governs customer treatment (so outcomes aren’t left to chance).
• It embeds affordability and vulnerability intelligence (so support is sustainable).
• It gives you transparent performance and auditability (so you can evidence good outcomes).
• It continuously improves root causes (so you reduce harm, complaints, and cost-to-collect).

2026 won’t reward firms that are busy. It will reward firms that are outcome-credible.

Table of References