Money Covered: The Week That Was – 17 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 

BlueCrest Capital Management: FCA censure firm and impose $101m redress scheme over conflict-of-interest failings

On 13 October 2025, the FCA issued a Final Notice against BlueCrest Capital Management (UK) LLP (BlueCrest) following an extensive investigation into its management of client and proprietary funds. 

Between 2011 and 2015, the FCA found that BlueCrest reallocated experienced portfolio managers from its external client fund (BCIM) to its proprietary fund (BSLF), substituting them with less experienced staff without adequate disclosure to clients. This led to diminished performance for client investors and highlighted significant failures in BlueCrest’s governance and conflict management.   

BlueCrest has now been censured by the FCA and ordered to pay $101m to non-US investors. The FCA's decision and rationale centred on the importance of transparency and fair treatment, noting that BlueCrest’s conduct undermined client trust and market integrity.

BlueCrest initially appealed the FCA’s decision notice to the Upper Tribunal, which struck out the FCA’s case on redress and set out the need for a legal liability to be established before redress was payable under a single-firm redress scheme (similar to the position under s.404 of FSMA). The FCA successfully appealed to the Court of Appeal, which determined that the FCA's ability to implement a redress scheme under s.55 of FSMA was not constrained by the need to establish a legal liability as required by s.404F(7) of FSMA (although they did note that, if none of the four conditions for establishing a legal liability were fulfilled, a redress scheme may be deemed irrational – see here for RPC's blog on this). Although BlueCrest obtained permission to appeal to the Supreme Court, this appeal has now been withdrawn.

Click here to view the FCA's Final Notice.

IFAs and wealth managers

Firms set aside £423m for ongoing advice redress

According to a review by the FCA, UK advice firms have collectively set aside £423 million for ongoing advice redress. This figure is based on disclosures from seven firms, though the FCA surveyed 22 firms for its review. Some firms have yet to publish annual results for 2024, so further provisions may be announced.

The seven firms who have disclosed figures to date are as follows:

• St James’s Place: £320 million

• Quilter: £76 million

• Ascot Lloyd: £17 million

• True Potential: £5 million

• Schroders Personal Wealth: £3.7 million

• Sandringham Financial Partners (MG): £1 million

• 2Plan: £1 million

The FCA's review covered the 22 largest advice firms. 83% of client reviews were delivered as promised. However, 15% of clients did not respond or declined to engage and 2% of reviews were not delivered. The FCA described the results as “a good outcome for the industry”, highlighting improved delivery and client engagement. 

Despite positive findings, the significant redress provisions indicate ongoing gaps in the delivery of annual advice reviews. The FCA expects firms to honour commitments and maintain trusted client relationships. Firms not meeting delivery standards risk regulatory scrutiny and may need to set aside further redress. The FCA’s focus remains on transparency, accountability, and ensuring clients receive the advice they have paid for.

To read more, please click here.

Financial institutions

Capita fined £14m by ICO for data breach

Outsourcing firm, Capita, suffered a data breach in 2023, affecting the personal data of 6.6 million individuals. Compromised information included bank details, phone numbers, and home addresses. Stolen data was subsequently sold on the dark web, significantly increasing the risk to affected individuals. The Information Commissioner’s Office (ICO) fined Capita £14 million for failures in data protection and security. Capita reached a settlement with the ICO, accepting responsibility and agreeing to pay the penalty. Following a forensic investigation, Capita contacted all individuals identified as potentially impacted by the breach.

Capita’s new CEO, Adolfo Hernandez, stated that the firm has significantly strengthened its cybersecurity posture. Measures include advanced protections and an embedded culture of continuous vigilance to prevent future incidents. Capita has publicly reaffirmed its commitment to data security and client protection.

The fine and breach have led to downgraded free cash outflows for the year, now estimated at £59m to £79m (previously £45m to £65m). The incident has reputational implications and may affect client trust and future business. Capita faces ongoing scrutiny regarding its data protection practices and must maintain robust compliance to avoid further regulatory action.

The ICO’s enforcement highlights the seriousness of inadequate data security, especially for firms handling large volumes of personal data. Organisations must ensure proactive cybersecurity measures, thorough incident response, and transparent communication with affected individuals. The case underscores the need for continuous improvement in data protection and compliance with UK GDPR requirements.

To read more, please click here.

Pensions

Pensions Data Project highlights benefits of small pot consolidation

The Pensions Data Project (PDD) has published its final report which finds that around 2 million small defined contribution pension pots (out of 11.8 million deferred pots in 2022/23) of the UK's five largest master trusts could be consolidated if all five master trusts were designated as default consolidators under current government proposals.

The report identifies gender and age disparities in pension savings (men, older members, and those in certain regions typically have higher balances). It also points to the risks associated with fragmented pots with members across the five master trusts having an averaging of 1.3 pension pots each (the result of job changes and churn in the labour market) but likely more if they have pots from other types of scheme. The PDD notes that "small pots are an issue because they are not economically viable for a provider to administer and risk being lost by the member" and suggests that consolidating pots could increase average balances by over 25%.

The report concludes that its findings align with ongoing parliamentary scrutiny of the Pension Schemes Bill which will look to consolidate small pots through multiple default consolidators.

To read the report, please click here.

FOS developments

High Court dismisses claim for judicial review against FOS

The Administrative Court has refused the claimant (Ms Clark) permission to apply for judicial review of a decision by the Financial Ombudsman Service (FOS) in which it rejected her complaint Legal & General's for refusing to pay a terminal illness benefit claim under a life insurance policy.

The policy provided as follows:

"If the Life Assured has a Terminal Illness, namely an advanced or rapidly progressing incurable illness, where in the opinion of an attending Consultant and our Chief Medical Officer, the life expectancy is no greater than 12 months, Legal & General will make an advanced payment of the Sum Assured".

The Claimant relied on a medical report from July 2021 which stated that the claimant's life expectancy was on balance three years plus/or minus a year. This was presented to insurers in support of a claim for the terminal illness benefit in August 2021. 

The Court decided that the FOS's decision was reasonable and therefore lawful based on the Claimant having failed to produce clear evidence to establish that her life expectancy was less than 12 months at the relevant time as required by the policy. The decision is unsurprising based on the medical evidence the Claimant relied on in support of the complaint given it clearly did not satisfy the relevant term of the policy.

Regulatory developments for FCA regulated entities

FCA Consultation on Car Finance Redress Scheme: Key Implications for Senior Managers

The FCA has published a consultation paper on the proposed car finance redress scheme. The proposals state that senior managers must personally attest that their firm has robust systems to identify customers eligible for redress and has properly assessed whether disclosures about commissions and tied arrangements were adequate. Attestation carries significant personal risk: if the FCA later finds the firm’s processes or decisions were insufficient, senior managers may face direct enforcement action.

The FCA’s proposed scheme sets lower thresholds for “high commission” than recent case law, increasing the number of agreements subject to compensation and scrutiny. Senior managers are responsible for making judgement calls on disclosure adequacy, including documenting the rationale for each decision. Failure to demonstrate reasonable efforts or proper documentation may expose managers to regulatory sanctions.

Many lenders and brokers lack historic customer records, especially for older or tied arrangements; smaller dealerships may have poor record-keeping practices. Data protection laws may mean relevant records have been lawfully deleted, complicating efforts to identify affected customers. Senior managers must ensure all reasonable steps are taken to locate missing data, which may involve tracing agents or contacting estates of deceased customers. The FCA expects a forensic approach to data retrieval and may require collaboration with third parties to reconstruct records. Firms may need dedicated claims handling teams and robust governance to manage complaints efficiently and mitigate regulatory risk.

Under the scheme, senior managers should adopt a well-documented, reasonable approach to disclosure assessments, anticipating FCA scrutiny. Legal and operational challenges include contesting FCA presumptions about missing records and navigating lower compensation thresholds. The personal accountability imposed by the attestation requirement means senior managers must be vigilant and proactive in overseeing compliance.

To see the consultation paper, please click here.

FCA announces plans to support tokenisation to drive innovation and efficiency in asset management

On 14 October 2025, the Financial Conduct Authority set out plans to support tokenisation in order to drive innovation and growth in asset management. Tokenisation means the digital representation of assets on distributed ledger technology. The FCA believes that tokenised products could drive competition and increase choice for consumers, as well as broaden access to private markets and infrastructure investment. It can also help asset managers to innovate, as well as reduce the costs of fund management, and open up new ways to distribute funds, including to those new to investing.

• The FCA has set out a number of proposals to support tokenisation including:
  Guidance on operating tokenised fund registers under current FCA rules through the UK Blueprint model.

• A streamlined, alternative dealing model for fund managers to process buying and selling of units in authorised funds, whether traditional or tokenised.

• A roadmap to advance fund tokenisation and address key barriers like using public blockchains and settling transactions entirely on the blockchain.

• A discussion on how tokenisation models could evolve and how regulation may need to change.

The FCA's consultation is also intended to support the delivery of the FCA’s roadmap for digital assets.

To read more, please click here.

Emerging risks

FSB publishes report for authorities on AI monitoring

On 10 October 2025, the Financial Stability Board (FSB) published a report advising financial authorities on monitoring the adoption of AI and related vulnerabilities in the financial sector. The report builds on the FSB’s 2024 report on the Financial Stability Implications of Artificial Intelligence. The report notes that although financial authorities have made progress in understanding AI use cases and their benefits and vulnerabilities, oversight is still at an early stage, with challenges including data gaps and lack of standardised taxonomies. The report identifies indicators to support monitoring AI adoption and related vulnerabilities in the financial system.

The report recognises that third-party providers play a critical role in helping financial institutions to deploy and develop AI applications. However, the report highlights that such relationships could expose financial institutions to operational vulnerabilities and could lead to critical third-party dependencies. This is particularly so with generative AI where there is dependence on a small number of key suppliers. The report includes a case study to explore these challenges.

The FSB also encourages national authorities to enhance their monitoring approaches by leveraging the indicators presented in the report.

To read more, please click here.

With thanks to this week's contributors: Daniel Parkin, Dorian Nunzek, James Parsons, and Lauren Butler.