Money Covered: The Week That Was – 10 April 2026

Welcome to The Week That Was, a round-up of key events in the financial services sector over the last seven days.

The fifth episode of Season 4 of our podcast, Money Covered – The Month That Was, where the team looks at the Financial Conduct Authority's Vehicle Finance Redress Scheme Consultation, is now available.

To listen to this and all previous episodes, please click here. 

Headline development

FOS publish response to the FCA review into the impact of AI

On 2 April 2026, the Financial Ombudsman Service (FOS) published its response to the FCA's recent review into the use and impact of advanced AI on retail financial services. 

In the FCA review, the FCA confirmed that it was not intending to introduce extra regulations around AI. Instead, it confirmed the continued reliance on existing frameworks (such as the Consumer Duty) to focus on outcomes and the mitigation of any risks associated with the use of AI. 

In its reply, the FOS note the increased use of consumers (and some advisors) using AI in complaints and correspondence which has led to longer and inaccurate submissions. It is also noted that although complaints against firms using AI are relatively low, any alleged 'financial advice' provided by AI is outside of the FOS's remit. FOS highlight the continued risk to vulnerable consumers where the AI algorithms are unclear and have therefore called on the FCA to:  

• Provide guidance for firms to follow in evidencing the firm's identification and support for vulnerable customers.
• Allow consumers to request human review and receive plain English explanations in scenarios where AI has provided an outcome.
• Set clear expectations that firms should provide the FOS and consumers with a clear explanation on how AI contributed to an outcome (including the prompts and documents input in the AI system).
• Clarify the current expectations for record-keeping, paths to human escalation, and dispute handling in scenarios where no human is involved (such as where a consumer's AI agent may interact directly with a firm's AI chatbot).

To read more, please click here.

Tax practitioners

Cash for information: how HMRC is paying for intelligence

In November 2025, HMRC launched the Strengthened Reward Scheme (SRS), an enhanced informant and reward scheme, marking a significant shift in the UK’s approach to tackling serious tax avoidance and evasion. This initiative, announced in the 2025 Budget, represents a deliberate move towards providing financial incentives for whistleblowers, closely modelled on established programmes in the US and Canada.

Under the SRS, individuals who supply information that enables HMRC to collect significant unpaid tax may receive a share of the revenue recovered. HMRC's official guidance states that a reward may be payable where information leads to the collection of at least £1.5 million in additional tax, with awards ranging from 15% to 30% of the amount collected (excluding penalties and interest). The SRS applies primarily to serious tax avoidance and evasion involving large corporations, wealthy individuals, or offshore structures. 

However, any system that offers potentially substantial financial rewards is likely to attract attention beyond the sphere of legitimate informants. Generous rewards may encourage vexatious, speculative, or opportunistic reports that allege wrongdoing but lack credibility or actionable evidence. 

RPC's Michelle Sloane has written a blog which explores the likely impact of the SRS and how it falls broader global trend for incentivised enforcement. To read it please click here. 

Regulatory developments for FCA regulated entities

FCA publishes findings from multi-firm review of CDD controls

The FCA has published the findings of its multi-firm review into customer due diligence, enhanced due diligence and ongoing due diligence controls across a range of sectors.

The review, carried out in 2025, assessed firms’ systems and controls through questionnaires, desk-based reviews of policies and procedures, customer file reviews and interviews with staff. The FCA considered firms’ arrangements against the Money Laundering Regulations 2017 and its Financial Crime Guide.  

The FCA highlighted a number of weaknesses, including:

• policies and procedures that did not explain clearly what additional measures should be taken for enhanced due diligence;
• a lack of guidance for staff on how to identify and verify customers who could not provide usual forms of identification;
• insufficient detail on the frequency of periodic reviews and what should happen following an event-driven review;
• failures to gather or record key customer due diligence information, including the purpose and intended nature of the business relationship;
• failures to evidence and document enhanced due diligence measures for higher risk customers;
• limited evidence showing how firms differentiated between low and high-risk customers;
• failures to carry out periodic reviews where required;
• a lack of independent second line assurance, with the same staff sometimes responsible for both onboarding and reviewing customers; and
• poor version control, meaning firms could not demonstrate a proper audit trail of changes to documentation.

The FCA says firms should consider these findings in the context of their own business and continue reviewing their customer due diligence controls.  The findings will be of interest to businesses outside of FCA regulated entities given the proposal that the FCA's remit with respect to money laundering is to extend to other professional service firms – law firms and accountants in particular.

To read more, please click here. 

Backlog of claims being dealt with by FSCS

In a letter seen by Citywire from the Financial Services Compensation Scheme (FSCS) to an adviser working on claims against failed advice firms, the FSCS has reported having a backlog of claims and that it is unable to provide a timeframe as to when cases will be allocated.

Citywire reports that it has seen other letters noting the same issues and after Citywire reached out to the FSCS for comment, the FSCS responded stating that it operates an efficient claim system and that for more complex claims, it is continuing to innovate so that claims can be dealt with as efficiently as possible.

From the FSCS's comments the extent of the backlog is unclear. It also seems that the backlog largely relates to advice claims, with the FSCS confirming that claims times concerning insurance and deposits are operating within service level expectations.

To read more, please click here [requires registration].

With thanks to this week's contributors: Heather Buttifant, James Parsons, Brendan Marrinan, Ben Simmonds, and Kerone Thomas