Money Covered: The Week That Was – 11 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 extends consultation period for motor finance consumer redress scheme

The FCA has decided to extend the consultation window for its car finance compensation scheme proposals, which will now close on 12 December.
 
In extending the deadline, the FCA acknowledges the importance of receiving as much evidence as possible as well as alternative suggestions. The FCA has said it will consider all the evidence and ideas received before taking final decisions, and that the scheme is still expected to launch in February or March 2026. 

To read the FCA's Consultation Paper, please click here. To read RPC's blog, please click here.

Accountants and auditors

ICAEW's annual AML supervision report examines non-compliance

The ICAEW’s latest supervision report for 2024/25 (the Report) reviewed 1,185 firms for anti-money laundering compliance. It found that four out of five firms met the required standards or were generally compliant, maintaining the overall level of compliance seen in the previous year. There was a positive increase in firms achieving full compliance – rising to 19.4% from 13.9% seen in 2023/24. However, the Report recorded a slight increase in firms failing to meet compliance requirements - rising to 20% from 19.3%. 

The Report identified persistent shortcomings in CDD procedures. Frequent issues included inadequate documentation of risk assessments, which affected 12.6% of firms. Additionally, 11.9% of firms were found to have insufficient processes for verifying the identity of clients, while 10.2% struggled with the effectiveness of their verification checks. Another area of concern was the failure to keep CDD information up to date throughout client relationships, with 11.6% of firms failing to conduct ongoing monitoring.

Firms with annual incomes below £300,000 were less frequently subject to follow-up action, whereas those with incomes exceeding £2m were disproportionately represented among those requiring further intervention. Mid-sized firms tended to be repeat offenders, while smaller practices were more often flagged for first-time compliance failures. 

The ICAEW states that the lack of understanding of AML regulations remains a significant barrier, with some firms misinterpreting requirements or failing to keep pace with regulatory changes. Many firms focused heavily on identity verification but neglected broader risk evaluation and ongoing monitoring. To address these challenges, the ICAEW recommends regular and comprehensive staff training, enhanced due diligence for high-risk clients, and the integration of adverse media screening into onboarding and transaction reviews. Firms are urged to treat CDD as a proactive, continuous process rather than a box-ticking exercise. 

To read the ICAEW's full Report, please click here.

FOS developments

Law firm and CMC complaints to FOS collapse 

The number of complaints brought by law firms and claims management companies (CMCs) to the Financial Ombudsman Service (FOS) has fallen dramatically since the introduction of a new case fee. As of 1 April 2025, professional representatives can bring 10 cases to the FOS for free each financial year but are charged £250 for each one thereafter. If the outcome goes in favour of the complainant, £175 is credited to the representative.

Between July 2025 and September 2025, law firms and CMCs accounted for 4,300 cases brought to the FOS, compared to 37,100 in the same period last year, with a 37% reduction in the total number of FOS complaints over the same period. The FOS has also reported that professional representatives have withdrawn or abandoned “a large number of cases”. 

Of the complaints resolved between July 2025 and September 2025, a third were upheld, with current accounts being the most complained-about product. The number of complaints brought over motor finance mis-selling between July 2025 and September 2025 had fallen to 2,200, compared to 9,500 in 2024. This fall is reflective of not only the new case fee, but also the FCA's complaint-handling pause while it planned the redress scheme to follow the Supreme Court ruling.

To read the FOS' publication, please click here.

Regulatory developments for FCA regulated entities

FCA warns risk from consolidation in financial advice and wealth management sector 

The Financial Conduct Authority (FCA) has warned that consolidation among financial advisory firms can create risks for consumers and the wider financial system if not effectively managed. 

In a recent review of firms acquiring independent financial advisers or wealth managers, the FCA found high levels of debt, short-term borrowing, and reliance on cash from regulated entities to service group debt, often without emergency plans. Some businesses also used complex or offshore structures that weakened oversight and financial resilience. Governance weaknesses were common, including inadequate board challenge and poor monitoring of acquisitions. 

The FCA identified conflicts of interest, such as incentives for advisers that could influence client decisions, and noted that mitigation measures were often underdeveloped. Whilst not introducing new rules, the FCA urged firms to assess their risk management, capital structures, and governance to prevent harm to clients, employees, and markets resulting from poorly managed consolidation.

To read the FCA's review of consolidation in the financial advice and wealth management sector, please click here. 

Pensions

Pensions Dashboard Programme marks key milestone as Final Connection deadline approaches

The Pensions Dashboard Programme (PDP) has announced a significant milestone in the rollout of the pensions dashboard ecosystem, with just one year remaining until the final connection deadline of 31 October 2026. This deadline requires all in-scope pension schemes and providers to be fully connected, marking a pivotal moment in the UK’s ongoing pensions digital transformation.

Since the first connection in April 2025, the programme has seen robust progress, with over 700 schemes and providers now linked to the dashboard, representing approximately 60 million pension records—including the State Pension. The MoneyHelper Pensions Dashboard is currently undergoing rigorous testing, with early user trials indicating that the dashboard service is swiftly becoming a reality for pension savers. With infrastructure largely in place, the PDP emphasises a shift in focus: the next 12 months are crucial for ensuring every organisation meets its obligations on time. Trustees and managers are reminded of their ongoing responsibility to comply with the Pensions Dashboards Regulations 2022, Financial Conduct Authority rules, and PDP technical standards. The PDP warns that delaying preparations could lead to last-minute complications and regulatory breaches.

To support the industry, comprehensive guidance, technical support, and resources remain available from both the PDP and the Pensions Regulator. The PDP calls on pension schemes and providers to maintain momentum and prepare early, following the “connect by” dates set out in Department for Work and Pensions guidance. As the final connection deadline approaches, the PDP underscores the transformative potential of the dashboard ecosystem, urging the industry to make the coming year count and ensure a successful, compliant transition for the benefit of pension savers nationwide.

To read the announcement, please click here.

With thanks to this week's contributors: Daniel Parkin, Dorian Nunzek, Damien O'Malley, Ben Simmonds, Haiying Li, James Parsons, and Lauren Butler