Money Covered: The Week That Was – 10 October 2025

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

The fourth episode of Season 4 of our podcast, Money Covered – The Month That Was, where the team looks at Employment Practices Liability insurance and its relationship to Directors & Officers insurance, is now available.

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

Headline development

FCA publishes proposals for motor finance consumer redress scheme

The FCA has published its consultation paper on a motor finance Consumer Redress scheme under s.404 of FSMA. The FCA estimates that the total redress payable will be £8.2 billion. The sums at stake are considerably lower than some of the previous estimates but the potential exposure is still significant. The proposed scope of the Scheme is very broad, covering all motor finance agreements taken out between 6 April 2007 and 1 November 2024. A relationship will be considered unfair if there is inadequate disclosure of one or more of the following:

• A discretionary commission arrangement.
• A high commission arrangement (being one with commission equal to or greater than 35% of the total cost of credit and 10% of the loan).
• Tied arrangements that gave the lender exclusivity or a first right of refusal.

Whilst the FCA states that not all consumers who took out motor finance will be owed compensation, they still estimate that 14.2 million agreements (44% of those taken out since 2007) will be considered unfair. Overall, the average redress payment is anticipated to be £700. The deadline for comments is 18 November.

To read more about the Consultation, please click here. To read RPC's blog please click here.

Accountants and auditors

HMRC introduced new tool for R&D tax relief claims

HMRC has published a new online tool that assists users in determining qualifying R&D for tax purposes. The tool takes the user though a number of the key tests that define qualifying R&D. It will also provide explanations and links to further guidance. According to HMRC, once all of the questions have been answered, the tool will give the user a clear indication of whether the work carried on is qualifying R&D. 

HMRC has stated that a competent professional will be required to answer all of the questions. It is recommended that the user saves their result and keeps a record of the information used to answer each question as this will assist in making a claim for tax relief. HMRC has also stated that they are unlikely to disagree that a project involves R&D activities if the answers provided to the tool are based on the facts of the project and can be clearly supported and explained.

To read more, please click here.

FRC to develop technical guidance for pension scheme actuaries

The Financial Reporting Council (FRC) has announced it will issue guidance for pension plan actuaries following the landmark 2024 Court of Appeal ruling in Virgin Media Ltd v NTL Pension Trustees case.

The judgment clarified that changes to contracted-out pension benefits require written confirmation from a plan’s actuary for future rights, not just past benefits. This precedent could have forced defined benefit schemes to review historic amendments, potentially increasing liabilities by billions if changes were found to be void due to missing actuarial certification. In response, the government has proposed legislation allowing retrospective actuarial approval where certification was absent. 

The FRC’s forthcoming guidance aims to support actuaries and trustees in navigating these changes, with publication expected alongside the new legislation. The move seeks to resolve legal uncertainty for pension schemes affected by the Virgin Media decision.

To read the FRC's announcement, please click here. 

Pensions

Pensions Ombudsman finds no evidence of maladministration as SIPP operator complies with FCA guidance for non-standard investments

The Pensions Ombudsman has recently dismissed two complaints from pension scheme members (the Members), who suffered losses after their SIPP investments defaulted. Both Members were part of the Westerby Private Pension, administered and independently managed by Westerby Trustee Services Ltd (Westerby). The Members alleged that Westerby failed to conduct adequate due diligence on their chosen investments. They also criticised Westerby’s communication after their investments had failed.

However, the Ombudsman found Westerby had complied with the FCA's due-diligence guidance for non-standard investments, specifically, the FCA's “Dear CEO” letter issued in 2014 which outlined the robust checks required for non-standard investments.  Westerby carried out sufficient due diligence by reviewing company records, verifying identities, and confirming investment structures and repayments. Both Members signed documents acknowledging their status as high-net-worth or sophisticated investors – accepting personal responsibility for their own investment choices. The Ombudsman criticised Westerby for its delayed communication concerning the investment defaults. However, it concluded this did not warrant compensation, as the distress mainly arose from the investment failures themselves.

The ruling highlights the importance for SIPP operators to follow FCA due diligence standards to protect themselves from claims further down the line. 

Click here to read more.

Regulatory developments for FCA regulated entities

Consumer Duty in Focus: FCA's set priorities for 2025 – 2026

The FCA plans several projects to assess how firms are embedding the Consumer Duty across sectors and improving customer outcomes. These include: 

• Reviews of product and service design, especially for vulnerable customers.
• Reviews of firms' outcomes monitoring.
• Considering customer journey design (including applied friction); and
• Considering how firms support consumer understanding. 

The regulator may request data when needed and will provide feedback to assist firms. It emphasises proportionality, acknowledging that smaller firms may need tailored approaches. In Q1 2026, further guidance will be issued on vulnerability, data sharing, and data protection. The FCA will also focus on fair value, particularly for wealth and advice firms, urging them to use robust analysis to ensure value and prevent unsuitable advice. Upcoming priorities include a market study into pure protection insurance - examining consumer engagement, competition, and firm practices- and reviews of unit-linked pensions, long-term savings, and premium finance. These efforts aim to promote better outcomes and transparency across financial services.

To read more about FCA's priorities for 2025 - 2026, please click here. 

Watchdogs target unfair motor finance claims practices

The FCA in collaboration with the Solicitors Regulation Authority (SRA), Information Commissioner’s Office (ICO), and Advertising Standards Authority (ASA), is targeting inadequate disclosure, misleading advertising and excessive client fees in the motor finance claims sector.

The FCA's recent interventions have compelled nine law firms to disclose their exit fee structures, and the SRA is investigating 76 law firms for high-volume claims activity, having closed five firms in order to safeguard the public. Two Claims Management Companies (CMCs) have also suspended their exit fees, whilst others are not taking on any further clients or advertising until they can comply with the relevant regulations. 

Since January 2024, the FCA states its enhanced monitoring has resulted in the removal or amendment of over 740 misleading motor finance adverts. focus from regulators intensified following the Supreme Court’s decision in Johnson v FirstRand Bank. This judgment clarified that unfair relationships in motor finance are fact-specific, reducing the incentive for meritless claims. Moreover, since the start of 2025, the ICO has received over 230,000 complaints via its spam reporting service regarding unsolicited marketing practices linked to motor finance claims; this has prompted further investigations and could result in regulatory action against certain organisations. Meanwhile, the ASA is reviewing advertising standards in this sector.  Finally, the FCA has launched a £1m campaign to inform consumers they can seek compensation independently, without instructing law firms or CMCs.

Click here to read more.