Money Covered: The Week That Was – 19 December 2025

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.

We want to take this opportunity to wish all of our readers a merry Christmas and happy new year! The Week That Was will be taking a break for the festive period but will return on 9 January.

Headline development

FCA responds to Which? super-complaint

Readers of this bulletin will be aware that Which? recently made a super-complaint to the Financial Conduct Authority (FCA) in relation to poor consumer outcomes in home and travel insurance.

The super-complaint concerned home and travel insurance markets, with Which? stating that claims are too often rejected and that customers are routinely treated poorly. Which? said three features of these markets are significantly damaging consumers' interests – those being (1) poor claims handling, (2) inappropriate sales processes and (3) a lack of application and enforcement of FCA rules and other relevant law.

Which? called on the FCA to take the following actions:

• Urgently intervene to tackle the failure of home and travel insurance firms to comply with their legal obligations, taking formal enforcement action where necessary to force action and act as a deterrent (recommendation 1).
• Launch a market study to address the market dynamics driving poor consumer outcomes in the home and travel insurance markets (recommendation 2).
• Conduct a joint initiative with the government to review consumer protection legal frameworks in insurance and how they are operating in practice, identifying key areas where these need strengthening (recommendation 3).

The FCA has now responded, with Graeme Reynolds, director of competition and interim director of insurance, stating that the FCA welcomes Which? shining a light on these issues. The FCA has confirmed that it will be expanding the significant work it has planned to improve standards in the home and travel insurance market. This will involve working to improve claims handling by reviewing firms' customer service and delivery, and reviewing how firms oversee third parties that handle claims. The FCA will also look to improve consumer understanding of what their insurance covers in light of the fact its data reveals that "home and travel have persistently lower claims acceptance rates, partly reflecting lower levels of consumer understanding".

The FCA said that it will continue to work with firms where it has concerns and since commencing this review, it has taken various action including:

• Opening 2 enforcement cases
• Stopping 1 firm from growing its business until it fixes the problem
• Launching 3 independent reviews into firms' systems and controls; and
• Making 3 senior managers agree to fix problems and consider whether redress is due

Accordingly, it appears the FCA has loosely followed Which?'s first two demands (recommendations 1 and 2) but not the third, but further action could be taken as the FCA warned that "if we don't see improvements in claims outcomes, we will hold the industry to account".

To read the FCA's response, please click here. The super-complaint can be found here.

Pensions

TPR publishes 2025 statistics on occupational DB and hybrid schemes

On 16 December 2025, the Pensions Regulator (TPR) published its 2025 statistics on occupational defined benefit (DB) and hybrid schemes.

TPR's report covers 200 public sector DB schemes with 19,784,000 members and 5,060 private sector schemes with 9,174,000 members. The data broadly shows that the DB market continues to shrink – the key findings are that:

• The DB and hybrid landscape continues to shrink at a yearly rate of 3% on average.
• Schemes continue to close as the percentage of schemes that closed to future accrual, excluding those in wind-up, rose from 73% in 2024 to 74% in 2025.
• Membership in private DB and hybrid schemes has fallen by 3% since 2024 to 9,174,000.
• There are roughly an equal number of pensioner members (47% of total members) and deferred members (46% of total members) in private schemes.

Another key finding is that funding levels remain in surplus on the whole. TPR confirmed that the technical provisions (TPs) funding level has stayed the same at 118%, while both assets and liabilities fell by 10%. The percentage of schemes in TPs surplus is 82% in 2025, higher than the 2024 figure of 80%.

To read more, please click here.

Pensions Ombudsman publishes information for members on overpayments  

On 16 December 2025, the Pensions Ombudsman (TPO) published new information to help members of pension schemes understand the key issues that arise when a pension has been overpaid.

TPO has explained that the information is designed to be factual and neutral and allow disputes to be resolved the earliest possible stage. TPO has stated that they would like schemes to share this information with a member when informing them of an overpayment, or when a member queries or challenges the scheme’s attempt to reclaim an overpayment.

The information is designed to members understand:

• What an overpayment is.
• What obligations exist around repaying overpayments.
• What potential legal defences exist for not repaying the money.
• The requirement to engage with the scheme and provide evidence for the defences.
• What to expect from the scheme when an overpayment occurs.
• How TPO can help if a dispute cannot be resolved with the scheme.

To read more, please click here.

Government consults on raising trustee standards

The UK government has opened a consultation seeking views on proposals to improve the standards in pension trusteeship and administration.

The government has said it is launching this consultation in recognition of the "pivotal role" trustees play in the pensions industry and their responsibility for the pensions of millions of savers, and the fact that the landscape is changing as the industry shifts towards 'mega-funds' as small defined contribution schemes are consolidated resulting in fewer, larger defined benefit and defined contribution schemes.  

The Department for Work and Pensions' consultation paper includes proposals to improve trustees' skills, knowledge, and capability, with potential measures such as the introduction of mandatory accreditation, enhanced oversight, and additional safeguards (which could include imposing limits on the number of appointments held by professional trustees). The government is also considering ways to strengthen trustee board diversity and improve trustee appointments (which could involve the appointment of public (independent) trustees) to ensure boards remain focused on member outcomes.  

Responses to the consultation are invited ahead of the closing date in March 2026.

To read more, please click here.

Regulatory developments for FCA regulated entities

FCA sets out plans to help build mortgage market of the future

The FCA has announced that from early 2026, it will start to consult the public on reforms to the mortgage market and that it is aiming to introduce the first rule change later on in 2026. The FCA is focussing on four areas:

• First time buyers & underserved consumers: Simplification of mortgage rules allowing for greater flexibility in products which reflect different income levels and working patterns at different stages of life.
• Later-life lending: Exploring how advice can be improved to help people confidently plan for later life; reviewing interest-only requirements to make them more accessible to those in retirement and to ensure the lifetime mortgage market can meet customers' changing future needs through a market study.
• Innovation & disclosure: helping consumers more easily understand online information by looking at advertising and disclosure rules and also encouraging the use of technology (including AI).
• Protecting vulnerable consumers: helping to support those using a mortgage to manage or consolidate debt and to support victims of financial abuse by working with partners.

The intention behind these plans is to help first-time buyers and the self-employed to get onto the housing ladder, as well as helping to unlock wealth from property for homeowners in later life. Executive director for payments and digital finance, David Geale, said that the changes will help to widen access to affordable mortgages to meet the needs of consumers today.

The FCA has also confirmed that it will be launching a focussed market study, with terms of reference being published in the first quarter of 2026, to consider how the later life lending market could develop to meet the different needs of consumers. The FCA has said that the study will consider how the FCA can support the market to ensure that consumers can access fair value products that meet their needs.

To read more, please click here.

FCA publishes policy statement on tackling non-financial misconduct in financial services  

The FCA has published final guidance on how firms can apply new rules governing Non-Financial Misconduct (NFM) following revisions in July designed to align the conduct rules in banks and non-banks for serious NFM.  NFM broadly consists of bullying, harassment or violence in a work context.

The guidance provides further detail on when misconduct becomes an FCA conduct issue and the rules the firm could potentially breach. Its broad effect is to make misconduct issues an FCA issue in a wider range of circumstances.

The guidance is designed to help firms make fair, consistent decisions and take decisive action when standards are breached, with a non-exhaustive list of factors to consider when assessing breach. That said, the FCA stressed that it cannot provide guidance for every scenario and firms must continue to exercise their own judgment. Firms are not expected to investigate trivial or implausible allegations.

The consultation responses showed strong support for further guidance, with 95% of respondents agreeing that new Handbook guidance was needed. The Lloyd’s Market Association welcomed the guidance, emphasising its role in protecting employees, upholding market integrity, and attracting talent.

The final rules, supported by the final guidance, will take effect from 1 September 2026.

To read the FCA's Policy Statement of NFM, please click here.

With thanks to this week's contributors: Daniel Parkin, Dorian Nunzek, Damien O'Malley, Ben Simmonds, Haiying Li, James Parsons, and Lauren Butler.