Money Covered: The Week That Was – 12 September 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

Barclays drop appeal against the FOS in respect of motor finance commission

Barclays' appeal of the Financial Ombudsman (FOS) decision was based on the FOS' interpretation of the FCA rules and Consumer Credit Act (1974) as to whether a lender and car dealer met the required standards (in place at the relevant time) in respect of disclosing commission.

Following the FOS decision and subsequent High Court Judgment - both in favour of a compensation payment to the consumer - Barclays had been set to proceed to the Court of Appeal in September. However, following the Supreme Court ruling in August (to read more, please click here), Barclays have withdrawn the Court of Appeal proceedings in favour of awaiting the outcome of the Financial Conduct Authority's (FCA) consultation into a redress scheme.

To read more, please click here.

Accountants

Reports that firm faces criminal prosecution for alleged tax repayment fraud

The ICAEW has published an article, amongst growing media reports, that a firm is being criminally prosecuted in relation to research and development tax credit repayment fraud. If the reports are correct, it is understood to be the first criminal prosecution under the Corporate Criminal Offences (CCO) rules.

It is understood that a trial will take place in 2027.

To read more and to read the regulator's warning on the CCO rules, please click here.

Tax practitioners

HMRC name and shame barrister as a promoter of tax avoidance schemes

HMRC, for the first time, have chosen to name a practicing barrister as a promoter of tax avoidance schemes. The barrister (Mr Setu Kamal) designed four arrangements though umbrella companies which were designed to reduce workers' Income Tax and National Insurance liabilities.

The schemes, which allow workers to 'keep more of their pay' through a system of complex corporate and contractual structures, have been slammed by HMRC as being 'nonsense and doomed to fail'. In the event of the scheme failing, individuals will then face significant tax bills, interest and potential penalties.

The public naming and shaming by HMRC signals HMRC's intention to tackle tax avoidance by not just targeting the companies that market the schemes, but the individuals and advisors behind them.

To read more, please click here.

Brokers

FCA to cut reporting requirements of brokers

The FCA is proposing to make further cuts to the data reporting requirements of the Retail Mediation Activities Return (the Return). The Return currently requires brokers who provide advice on mortgages, insurance and other retail products to consumers to report quarterly and bi-annually, depending on the size of the firm.

Under the proposed changes, brokers in scope would only have to report annually on professional indemnity insurance cover, training/competence and pension transfer specialist advice. This streamlining and reduction of regulatory reporting requirements will be good news to retail intermediary brokers, benefitting up to an estimated 11,000 firms.

To read more, click here.

Financial institutions

High Court considers state of APP fraud cases post-Philipp

In the recent case of Barclay-Ross v Starling Bank Limited, the High Court have refused to strike out claims against a bank in relation to authorised push payment (APP) fraud cases.

By way of reminder, in Philipp v Barclays Bank UK plc [2023], the Supreme Court dismissed the notion of the existence of an independent "Quincecare" duty, holding that it existed merely as an extension of the general obligation to exercise reasonable skill and care in 'interpreting, ascertaining, and acting in accordance with' a customer's instructions'. In other words, APP fraud cases did not require a distinct legal framework for their determination.

Barclay-Ross entailed a customer requesting payments out of jurisdiction from the defendant bank. She subsequently notified the bank that the recipients were fake and sought to recover the sums paid from the bank. The High Court held that it was at least arguable that, upon being notified of fraud by a customer, the bank had a duty to seek its customer's instructions to recover said payment.

You can read more here.

FCA to target misleading motor finance claim advertising

Regulatory action against misleading motor finance compensation advertising has escalated, with the Financial Conduct Authority (FCA) confirming the removal or amendment of approximately 400 promotions by claims management companies (CMCs) since last year.

Advertising intensified following the Supreme Court’s judgment in Johnson v FirstRand Bank in August, which clarified that car dealers do not owe a fiduciary duty to consumers, although claims could still be pursued where the agreements were 'unfair'.

The FCA’s chief executive, Nikhil Rathi, told the House of Commons Treasury Committee that CMCs continue to promote inflated compensation figures (often suggesting payouts of thousands of pounds) despite the regulator’s estimate that most payments will be much smaller. Mr Rathi emphasised that the FCA will be firm and assertive with regulated entities making inaccurate or exaggerated claims to consumers.

Consumers concerned about motor finance agreements are advised to contact their lender directly, rather than engage CMCs or solicitor firms (which may deduct up to 30% of any compensation awarded under a 'no win no fee' agreement). The FCA is preparing to consult on a new compensation scheme designed to provide direct redress to eligible consumers, aiming to streamline the process and minimise reliance on legal intermediaries. The regulator expects most of the 14.6 million affected car finance agreements to result in compensation, with further details on the scheme due to be published in the coming weeks.

You can read more here.

Pensions

DB transfer reporting obligations to be cut back

The Financial Conduct Authority (FCA) has introduced proposals to cut back reporting obligations for advisors on pension transfers. As referenced in the article for brokers above, similar proposals include a move from biannual to annual reporting.

This move comes on the back of a reduction in the FCA's perception of the risk levels in the DB transfer market. Notably, whereas the obligation to report every 6 months was originally introduced on the back of the British Steel Pension Scheme scandal in 2019, regulatory changes since then (including a ban on contingent charging and tighter requirements relating to advice being taken before a transfer is effected) have resulted in greater consumer safety, albeit at the cost of approximately 900 firms leaving the market.

The FCA believes the measures will save £1.8m annually across the industry.

You can read more here.

FOS developments

Regulator provides assurance over FOS concerns

The Financial Conduct Authority (FCA) has confirmed that they are working closely with the Financial Ombudsman Service (FOS), to address growing concerns around complaints firms may face for providing targeted support.

Specifically, concerns have been raised regarding redress liabilities firms may face for providing targeted support for consumers - in line with their regulatory obligations. This has led to uncertainty from firms as to how the FOS will deal with complaints.

Speaking at a 'Boring Money Conference', the FCA’s head of department for asset management and pensions policy, Nike Trost, has confirmed that the regulator is liaising with the FOS to provide clarity on FOS complaints for firms providing targeted advice. It is hoped that this will provide confidence for firms to provide targeted support to consumers.

To read the quotes from the FCA, please click here.

Regulatory developments for FCA regulated entities

FCA considers AI regulation

In an update from the FCA on 9 September 2025, it has been confirmed that existing frameworks will be utilised to support adoption of AI into the UK's financial markets.

The FCA emphasised that their focus is on supporting firms with using AI in order to drive innovation, benefit customers and support growth.

The FCA remains mindful of the risks to consumers whilst wanting to ensure that firms have the ability to implement adaptive technologies.

To read more please click here.

Government consults on consolidating Payment Systems Regulator with the FCA

Earlier this year the government announced its intention to merge the Payment Systems Regulator (PSR) with the FCA as part of the Regulatory Action Plan.

On 8 September 2025 the government released its PSR consultation paper which sets out its proposals for consolidating the functions of the PSR with the FCA which would result in the FCA taking on the PSR’s responsibilities.

The objective behind the proposed merger is to reduce the number of regulatory bodies and simplify the regulatory landscape for firms and stakeholders to provide for a more streamlined regulatory environment for payment systems.

The consultation closes on 20 October 2025.

To read more, please click here.

Emerging risks

The UK continues to broaden the complexity and scope of compliance enforcement.

The Economic Crime and Corporate Transparency Act 2023 (ECCTA) provides for a new corporate criminal offence of failing to prevent fraud.

This is a change in the enforcement landscape as prosecutors no longer have the burden of proving that a 'directing mind and will' of the company, had involvement in the fraud.

Compliance issues in the UK regulatory and enforcement space remains focused on bribery, money laundering and tax evasion and particular attention is being paid to corporate criminal enforcement and serious compliance breaches.

To read more about the current UK enforcement space please click here.