Money Covered: The Week That Was – 16 October 2026

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

Headline developments 

Upper Tribunal delay deepens uncertainty over FCA motor finance redress scheme

The Upper Tribunal’s has confirmed that the hearing on challenges to the Financial Conduct Authority’s (FCA) motor finance redress scheme (previously set for December) will be now be heard in in February next year. This has heightened uncertainty for lenders and the wider market. By allowing expert evidence and requiring the FCA to explain and disclose more of its calculations, the Tribunal has opened the door to alternative outcomes other than the programme proceeding as designed—ranging from a compromise approach to abandoning the scheme entirely and reverting to “business as usual” complaints handling.

The redress scheme remains partially suspended, but lenders are still expected to progress complaints as far as possible while avoiding work that may need to be repeated depending on the progress of the scheme. Compounding the uncertainty, the FCA has also told lenders to prepare for the possibility that, if the scheme (or parts of it) are quashed, this may not go ahead at all, which would push disputes back into firms’ standard complaints processes—potentially producing more varied outcomes as cases turn on fact-specific evidence, documentation, commission arrangements and disclosure.

At the heart of the legal challenge is an attack on the FCA’s analysis of consumer loss. The challengers—including CA Auto Finance UK Ltd., Volkswagen Financial Services (UK) Ltd., and Mercedes-Benz Financial Services UK Ltd. argue that the methodology is non-transparent and flawed, and that the compensation required in some cases does not properly reflect actual or potential consumer harm. Those challenging the scheme are also critical of this potentially imposing significant liabilities without an effective right of appeal while declining to share the data supporting the programme’s design—an approach described to the tribunal as “extraordinary and unjustified”.

The tribunal has provided further directions ordering further disclosure and permitting economists’ expert evidence, which signal that the FCA’s analysis will be closely tested at the February hearing. If the tribunal finds the analysis flawed, the scheme could be quashed; if it dismisses the challenges, the FCA’s approach may be strengthened. 

For lenders, a modified scheme, or a fragmented complaints landscape could prove less predictable even if some firms would prefer to avoid a single FCA-set framework. For consumers, a no-scheme outcome could mean greater reliance on the Financial Ombudsman Service and the courts, with the trade-off of potentially higher individual awards through litigation but longer timeframes and more robust defence by lenders. 

To see the FCA's press release, please click here.

Auditors 

FRC issues guidance note on upcoming audit report wording changes

In June, the Financial Reporting Council (FRC) issued a revised International Standard on Auditing (ISA) (UK) 700 (Forming an Opinion and Reporting on Financial Statements) following a consultation in autumn 2025. The FRC also revised ISA (UK) 701 and ISA (UK) 720. These changes were designed to simplify and “declutter” the auditor’s report and increase the amount of useful information provided to users, and will become mandatory on 15 December 2026. After publication, the FRC engaged with audit firms that were interested in early adoption of the revised ISA (UK) 700 and firms asked for practical support to help them navigate issues that may arise when adopting early.

In response, the FRC has published a Staff Guidance Note (SGN) to support auditors choosing to adopt the revised ISA (UK) 700 ahead of its effective date, aligning with the FRC’s aim of simplifying auditor reporting. Alongside the SGN, the FRC has also published an interim statement of auditor’s responsibilities on its website.

To read the press release, please click here.

FOS developments 

FCA appoints new Chair of the FOS

On 9 October 2026, the Financial Conduct Authority announced that Liam Coleman has been appointed as the new Chair of the Financial Ombudsman Service (FOS).
Mr Coleman will act as chair for a 3-year term. He has served as interim chair for the last year, following the exit of Baroness Manzoor in August 2025. Mr Coleman took up the permanent role from 10 October.

Mr Coleman has over 30 years' financial services, public sector and board experience including previous roles at the FCA, NHS Foundation Trust, Nationwide Building Society, Royal Bank of Scotland and Cooperative Bank. He is also group chair of London & Quadrant Housing Trust. 

To read the FCA's press release, please click here.

With thanks to this week's contributors: Lauren Butler, Andrew Cox, Haiying Li, Daniel Parkin, Damien O'Malley and Dorian Nunzek.

If you have any queries please do get in contact with a member of the team, or your usual RPC contact.