Money Covered: The Week That Was – 17 July 2026

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

The fifth episode of Season 4 of our podcast, Money Covered – The Month That Was, where the team looks at the Financial Conduct Authority's Vehicle Finance Redress Scheme Consultation, is now available.

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

Headline development

Consumer Duty in focus: FCA findings on product design, monitoring, distribution and third-party oversight

On 10 July 2026, the FCA published findings from its review of 38 firms’ implementation of the Consumer Duty’s products and services outcome. The review examines firms’ approaches to product and service design, monitoring and review, distribution (including third-party arrangements), and the treatment of customers in vulnerable circumstances. The FCA emphasises that the examples are illustrative and do not create new regulatory requirements.

The FCA identifies several examples of good practice. Firms demonstrated stronger product governance by using customer profiles and impact assessments to align products with customer needs, and by designing more inclusive products and customer journeys for different customer groups, including vulnerable customers. Improvements were also seen in monitoring, with firms enhancing the quality of management information, acting promptly where issues were identified, and engaging more effectively with distributors to identify and address sales outside the intended target market. Overall, the FCA highlights the importance of evidence-based decision-making and using monitoring to improve customer outcomes.

The review also identifies areas for improvement. Some firms adopted overly broad target market definitions that did not adequately reflect product risks, while others identified customer vulnerability without demonstrating how customers’ needs were addressed. The FCA also observed weaknesses in the use of management information to trigger risk-based reviews, limited assessment of whether changes to products or customer journeys improved outcomes, and insufficient justification for distribution strategies and channel selection.

The FCA encourages firms to consider the findings when reviewing their own governance arrangements, take account of its ongoing consultation on Consumer Duty (CP26/23) before making significant process changes, and, where subject to the PROD Rules, use the examples as potential benchmarks for existing practices.

To read more, please click here.

Auditors

FRC Annual Report 2025/26: driving audit quality, stewardship and regulatory efficiency 

The FRC has published its Annual Report and Accounts 2025/26, highlighting a year of regulatory change aimed at supporting UK growth and investor confidence. Key developments include the updated UK Stewardship Code 2026 (with early evidence suggesting a 20–30% reduction in reporting volume), a revised supervisory approach for the 2026/27 inspection cycle with a greater focus on quality management systems, and a revamped Audit Enforcement Procedure offering more flexible routes to resolution. 

The FRC also completed its SME audit market study, introducing measures to improve proportionality and efficiency, launched the Innovation Improvement Hub, including a "Simplifying Annual Reporting" sandbox, and issued guidance on the use of generative and agentic AI in audits.

To read the full report, please click here.

Tax practitioners

Crypto, valuations and family planning under sharper HMRC CGT focus

According to Lubbock Fine, an accountancy firm in London, HMRC has been increasingly scrutinising cryptocurrency investors. It reports that additional tax recovered through capital gains tax investigations rose by 46% year on year, from £182 million to £266 million, based on Lubbock Fine’s Freedom of Information request.

Lubbock Fine reports that HMRC is increasingly focusing on cryptocurrency investors and amateur day traders, reflecting concerns that some taxpayers may underestimate HMRC’s scrutiny of undeclared gains from digital assets. HMRC is also examining CGT liabilities arising from transfers of shares and other assets to family members as part of tax planning, as such transfers can still trigger a taxable gain for the transferor.

Enforcement activity has also become more intensive. The number of completed CGT investigations increased by 26%, rising from 7,800 to 9,800 cases, whilst the average amount of underpaid tax identified per case increased from £23,333 to £27,142. Lubbock Fine also notes that HMRC is challenging asset valuations more frequently and suggests that proposed changes to Business Property Relief could lead to further investigations and penalties.

To read more, please click here.

Consultation on aligning NICs recovery and repayment time limits with income tax

On 13 July 2026, HMRC published a consultation looking at potential reforms for how National Insurance contributions (NICs) debts are recovered, with the aim of aligning time limits and processes more closely with those for income tax. 

At present, NICs recovery in England, Wales and Northern Ireland is generally subject to a six-year time limit from when the NICs become due under the Limitation Act 1980 and the Limitation (Northern Ireland) Order 1989. This contrasts with income tax, where assessment is subject to behaviour-based time limits but, once assessed, recovery is not subject to a fixed time limit. The government proposes removing NICs from the scope of those limitation regimes so recovery would no longer be capped at six years, introducing a statutory notice of NICs liability (Notice) that creates an enforceable debt and must be issued within behaviour-based time limits mirroring those in the Taxes Management Act 1970, and reducing the time limit for repaying NICs paid in error from six years to four years to align with income tax.

Under the proposals, the Notice itself would not carry a right of appeal. Instead, the liable person would have 30 days to pay or request a section 8 decision under the Social Security Contributions (Transfer of Functions, Etc.) Act 1999, with enforcement suspended while that decision is being made and (if appealed) until the appeal is resolved. The consultation also seeks views on introducing a statutory mechanism to withdraw a section 8 decision and on further simplifications to the section 8 process.

The consultation closes on 12 October 2026. To view the full consultation, please click here.

HMRC’s 2025 - 26 technical notes: sanctions enforcement activity and FIS performance in numbers

HMRC has published technical notes covering: (i) its sanctions enforcement activity; and (ii) the performance of its Fraud Investigation Service (FIS) for 2025 - 26. The notes provide a snapshot of HMRC's use of its civil and criminal enforcement powers, together with reported outcomes and enforcement metrics.

On sanctions enforcement, HMRC reports 58 seizures of sanctioned goods and a £1.16 million compound settlements relating to a breach of the Russia (Sanctions) (EU Exit) Regulations 2019 (SI 2019/855). It also confirms that 22 criminal investigations are ongoing and signals its intention to seek new powers during 2026 - 27 to publish details of companies that enter into compound settlements for strategic export and sanctions offences.

On FIS performance, HMRC highlights its continued enforcement action against serious tax fraud through both civil and criminal routes. It reports £4.2 billion in compliance yield generated in 2025–26, an 87% court success rate for criminal prosecutions, and more than £2 billion in Exchequer benefits arising from criminal investigations.
 
To read more, please click here and here.

Pensions

Pensions value for money framework consultation launched by DWP and FCA

The Department for Work and Pensions (DWP) and the Financial Conduct Authority (FCA) have jointly published a consultation paper on the new value for money (VFM) framework. The VFM framework has been developed over the past few years and applies to pension schemes regulated by the FCA and The Pensions Regulator (TPR). It aims to create a consistent policy approach across workplace schemes. It is anticipated that larger pension schemes will need to complete VFM assessments from 2028, with other schemes subject to the framework required to comply from 2029.

This latest joint consultation sets out the final proposals ahead of implementation and is open for comments until 1 September 2026. The consultation includes the regulators’ responses to the previous consultation and seeks feedback on the proposed policy approach for FCA and TPR-regulated pension schemes for which each body is responsible.

In addition, the DWP has published draft regulations expected to come into force in April 2027, and the FCA has published a draft instrument to amend the relevant parts of the FCA Handbook. It is planned that both contract-based and trust-based schemes will be subject to the new regime at the same time, with the final details expected to be available in early 2027.

To see the consultation, please click here. To see the DWP's draft regulations, please click here. To see the FCA's draft instrument, please click here.

DB pension transfer redress predicted to fall to lowest level in Q3 2026

Defined benefit (DB) transfer redress payments are anticipated to fall to record lows in the third quarter of 2026, according to projections from First Actuarial.

The decline in redress payments is attributed to strong investment performance and lower future inflation expectations. This follows Broadstone’s latest tracker for Q3 2026, which estimated that a typical consumer is now expected to be around £59,000 better off as a result of transferring, significantly higher than the £40,000 gain recorded in the tracker over the previous three quarters.

However, the central estimate masks variation between individual cases, with some consumers still likely to be entitled to compensation. This is typically the case where a loss has been suffered as a result of unusual investment strategies following a transfer or where the transfer took place at an earlier date, such as before 2010.

To read more, please click here.

FRC issues updated actuarial standard to support expansion of Collective Defined Contribution

The Financial Reporting Council (FRC) has recently published an updated Technical Actuarial Standard (TAS), along with accompanying guidance, to support the operation of multi-employer Collective Defined Contribution (CDC) pension schemes.

The changes introduce new requirements around actuarial equivalence, helping to ensure that pension benefits remain fair across different employers and member cohorts as contributions and risks are pooled.

Commenting on these changes, the FRC stated that "by underpinning CDC schemes with clear, proportionate and principles-based actuarial standards, we enable actuaries to deliver rigorous analysis that supports decision-making and strengthens confidence among members and stakeholders".

To read the FRC's published TAS, please click here.

Regulatory developments for FCA regulated entities

FCA to create a new Alternative Investment Funds sourcebook

On 14 July 2026, the FCA published a consultation paper on the UK regime for Alternative Investment Fund Managers (AIFMs). This consultation follows years of industry concerns regarding complex and unclear regulations.

The FCA intends to create a new Alternative Investment Funds sourcebook (ALTS) for managers of unauthorised funds. The FCA has confirmed that the ALTS chapters are thematic but have been organised in a way that broadly follows the lifecycle of an AIFM, from the classification of firms and funds through to organisational requirements and the marketing of funds. The FCA has also confirmed that, in the future, most of the AIFM regime will be contained within FCA rules.

In addition, the FCA is consulting on:

• Giving the FCA the power to determine firm size thresholds, with the threshold for small AIFMs set at £750 million net asset value and £5 billion Net Asset Value for large AIFMs.
• Introducing requirements for AIFMs to value assets properly, in good faith, and using due skill, care and diligence.
• Adjusting the scope of the requirement to prepare and make annual reports available to investors.
• Bringing the various disclosure regimes together in one place within ALTS and creating a clearer distinction between professional and retail disclosure regimes.

The deadline for providing feedback on the consultation is 18 September 2026 for most discussion chapters, with the deadline for comments on the prudential discussion chapter being 14 October 2026.

To read the consultation, please click here.

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

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