Money Covered: The Week That Was – 16 January 2026

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

On the fifth episode of Season 4 of our podcast, Money Covered – The Month That Was, Mel is joined by David Allinson to discuss the FCA’s proposed section 404 consumer redress scheme for vehicle finance.

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

Headline development

FRC confirms regulatory priorities for 2026

The Financial Reporting Council (FRC) has confirmed it will continue to pursue the five priorities it set out in January 2025 in furtherance of its core purpose – to serve the public interest and support UK economic growth by upholding high standards of corporate governance, corporate reporting, audit and actuarial work. 

The five priorities are to:

1. Underpin investor confidence in UK plc.
2. Reduce unnecessary burdens on business while maintaining high standards.
3. Develop deep insight into the markets it oversees so its regulation is based on evidence and expertise.
4. Identify future trends and innovations to support the health of the markets it oversees; and
5. Support the skills and resilience of the professions it regulates.

The FRC considers that this will help establish a regulatory environment that supports growth by strengthening investor confidence through high-quality audits and transparent reporting, allowing companies to access the capital they need to grow.

Specific measures are noted in the FRC's statement – these include:  

• Supporting the Government's ambition to reduce administrative burdens for business. The FRC notes that it has already reduced guidance associated with the UK Corporate Governance Code by 20 per cent, and the updated Stewardship Code could see reporting reduced by up to 30 per cent. The FRC says it will continue to look for opportunities to remove unnecessary reporting or regulatory burdens.
• Working on the Future of Audit Supervision Strategy and End-to-End Enforcement Review. The FRC says it will work closely with stakeholders to develop a more proportionate, system-focused approach as it modernises its audit regulation activity.
• Supporting small and medium-sized enterprises by publishing final guidance in the coming months to help auditors deliver work scaled appropriately to the complexity of smaller businesses; and
• Exploring how AI might shape the future of audit and working collaboratively with companies to reduce the length of annual reports.

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

Tax practitioners

HMRC enforces limits of business asset disposal relief

HMRC has confirmed its intention to contact taxpayers who may have exceeded their lifetime limit of £1 million under the business asset disposal relief regime (BADR).

BADR is a capital gains tax relief that can be used to reduce the percentage of capital gains tax that must be paid on the disposal of qualifying business assets. Taxpayers can make a claim for the application of this relief when submitting their self-assessment tax return. If a successful claim is made, the applicable capital gains tax is charged at a reduced rate of 10% for 2024/25. This reduced rate is set to increase to 14% for the 2025/26 tax year and to 18% for the 2026/27 tax year.

Depending on their circumstances, taxpayers who are risk at exceeding their lifetime limit can expect to receive one of two requests from HMRC.

In circumstances where the taxpayer has exceeded the lifetime limit prior to the 2024/25 tax year but has still submitted a claim for BADR, HMRC will request that the taxpayer amend their tax return for the 2024/25 tax year and remove the claim for BADR.

In circumstances where a claimed amount in the 2024/25 tax year has taken a taxpayer over the lifetime limit, the taxpayer will be asked to amend their return so that the total amount of BADR claim will fall within the lifetime limit.

To read more, please click here.

Regulatory developments for accounts

Big Firm and Mid-Tier Firms Pushing FRC to Abandon "Name and Shame" Policy

The UK's leading accounting firms with the blessing of the ICAEW and ACCA have begun to challenge the proportionality of the Financial Report Council's (FRC) long-standing policy of "naming and shaming" firms and companies at the beginning of an investigation.

Currently, the FRC discloses the name of the audit firm, the company involved and the specific financial year under review when it launches an investigation. While individual partners are rarely mentioned specifically, they are easily identifiable via a Companies House search for the relevant audit report. The consequences of being associated with an FRC investigation can have disastrous effects on an individual's career, despite the uncertainty of any actual misconduct at this early stage.

Those lobbying for a change have suggested that a more proportionate approach would be to restrict the public's right to know until a breach has actually been established, save where there is an immediate risk to market stability.

The FRC has introduced more proportionate regulatory tools that include an accelerated investigatory procedure for cooperative firms, and firm-led reviews with regulatory oversight. However, all these measures continue to include a public announcement of a probe which can inflict reputational damage on a firm from the outset and disincentivise active engagement and cooperation with the FRC. 

In light of the Financial Conduct Authority's decision to alter their own "name and shame" policies in favour of more business-friendly policies, it will be interesting to see whether the FRC follows suit.  

To read more, please click here.

Financial Ombudsman

Financial Ombudsman Releases Decision on Loss of Expectation

The Financial Ombudsman released a decision relating to entitlements where there has been an incorrect benefits quotation.

In March 2020, Mr. H received a retirement quotation from the British Airways Pensions Services Ltd (the Administrator). The quotation featured commutation options that had been calculated by combining his additional voluntary contributions and commuting part of his annual pension. However, a calculation error that failed to apply the relevant reduction for the commutation resulted in the quotation providing an incorrect pension sum and an overstated lifetime allowance charge.

Mr. H was informed of the miscalculation and was told the correct annual pension and LTA charge. In response, he submitted a letter of complaint to the Administrator and sought to receive the original incorrect pension on the basis that the statement received was a legally binding document that he had relied on to make his retirement decision.

The complaint was escalated via the Administrator's internal dispute resolution procedure, and subsequently the Financial Ombudsman.

The Financial Ombudsman acknowledged that Mr H had reasonably relied on the calculations provided by the Administrator. However, it was determined that this did not automatically entitle Mr. H to compensation. Mr. H had not suffered actual financial loss as it was not reasonably foreseeable by the Administrator that Hr. H would rely on the calculations to purchase and renovate a house. Rather, Mr. H had only suffered a loss of expectation. Additionally, the statement received was not legally binding and did not override the Scheme rules.

This decision highlights that individuals will have difficulties establishing an entitlement to an incorrect benefits quotation, beyond what they are entitled to under the scheme rules.

To read more, please click here

Regulatory developments for FCA regulated entities

FSCS publishes 2026 budget update

On 13 January, the FSCS published an update for the 2026 / 27 budget.

The update provided for a reduction of 6% in management expenses compared to 2025 / 26, including a budget of £97m for core costs. The budget also provided for £11m to enhance its revolving credit facility (RCF).

The FSCS has stated that the increase to the RCF would be offset by efficiency savings, and following regulatory developments, the increase would improve funding readiness. Plans are also being worked on by the FSCS, HM Treasury and Bank of England to increase the size of the RCF by . The FSCS states that in the event of firm failures and major defaults, it would help with paying compensation quickly and would protect public funds.

The FCA and PRA are also consulting on an increase to the overall FSCS management expenses levy of £4.4m compared to 2025 / 26 – representing an inflation-only increase. It also provides for a £5m unlevied contingency reserve, which again is unchanged from the current year. The consultation is due to close on 10 February 2026.

To read the FSCS' budget update, please clickhere.

FCA confirms October 2027 start date for cryptoasset regime

The Financial Conduct Authority has confirmed that its regulatory regime for cryptoassets is expected to apply from 25 October 2027, subject to the passage of relevant legislation.

The FCA has published a handbook setting out rules and guidance made under the Financial Services and Markets Act 2000 (Cryptoassets). The handbook is divided into a number of sourcebooks covering high-level prudential and business standards, as well as regulatory processes.

The guidance outlines the FCA’s approach to the threshold conditions, the Principles for Businesses, the Consumer Duty and the Senior Managers and Certification Regime. It also sets out its intended approach to authorisation, supervision and enforcement.

Further detail has been provided on how the gateway for firms entering the regime is expected to operate, and on proposed transitional provisions for firms that do not secure authorisation, including arrangements to allow for an orderly wind-down of UK business.

The update follows a number of consultation and discussion papers published in December 2025, which sought feedback on proposals relating to firms involved in cryptoasset activities.

The FCA has said it will continue to publish further consultations over the coming months, setting out proposed rules and guidance ahead of implementation.

To read more, please click here.

With thanks to this week's contributors: James Parsons, Alison Thomas, Daniel Goh, Heather Buttifant, Ben Simmonds, Kerone Thomas, and Rebekah Bayliss