Money Covered: The Week That Was – 19 September 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

FRC Launches Programme to Support Smaller Audit Firms

The Financial Reporting Council (FRC) has launched the Scalebox Programme. The programme will support the growth of smaller audit firms by developing their audit quality and systems of quality management. Participating firms will be provided with workplans along with regulatory oversight and resources to enable them to overcome market constraints in the public interest entities (PIE) sector and enter this market more readily.

Scalebox is the latest FRC initiative to combat the "Big Four's" market dominance of the PIE sector. The concern is that the current market state will "threaten confidence, undermine choice and pose a systemic risk to investment in the UK."

The FRC are keen "to support the growth of those firms that want to establish a greater presence in the PIE audit market who commit to delivering high quality and safeguarding the broader public interest that audit supports"

The programme also addresses industry concerns that UK's auditing standards are unfairly geared towards large complex corporate audits. The FRC hopes to gain insight into what constitutes proportionate oversight of less complex PIEs and better support smaller companies that struggle to scale standards for SME audits.

To read more, please click here.

Tax Practitioners

HMRC tighten tax rules for umbrella companies

 HMRC has announced new rules to take effect from April 2026 to tackle non-compliance in the umbrella company market.

An umbrella company is typically used to temporarily employ self-employed contractors and act as an intermediary between contactors and their clients. The company is supposed to handle administration, including pay roll and tax responsibilities, however HMRC's analysis between 2022 and 2023 show a significant failure to comply with tax obligations.

The new rules are intended to ensure that taxpayers are protected from large tax bills later down the line due to the umbrella company's non-compliance with tax rules. The rules will apply to all new and existing entities (including the end client and the umbrella company) for all payments made to employees on or after 6 April 2026.

Compliance with the rules will sit with the umbrella company, the end client or any agency involved with the supply of workers. In the event of non-compliance, HMRC will be entitled to recover any underpayment of PAYE tax from the end client directly.

To read more, please click here.

Pensions

Pension Transfer Delay Complaints to Financial Ombudsman Service Fall

According to a Freedom of Information request by the FT Adviser, complaints to the Financial Ombudsman Service about pension transfer delays have fallen by seven percent in the last tax year.

This statistic comes as quite a surprise given the industry concerns over the length of delays for pension transfers. PensionBee has reported that one in six advisors experienced lengthy pension transfer times of over one year, even in spite of providers being able to switch funds in under ten days.

There is widespread concern from pension advisors that poor switching experiences were harming the reputation of the financial services industry, and that immediate legislative reform is necessary to protect the wider public from "the hands of a broken system." The push for legislative reform has garnered widespread industry support with ninety-six percent of advisors supporting legislation that would mandate a reasonable transfer timescale for pension switches.

To read more, please click here.

Pension withdrawals rise by 36%

According to the FCA's latest Retirement Income Mark Data on 2024/25, pension withdrawals have surged by 36% with savers taking out £70.9bn compared to £52.2bn the previous year.

The data reveals that 1 million pension plans were accessed for the first time, an increase of 8.6% on 2023/24 and sales of drawdown policies have risen by 25.5%.

Broadstone's head of personal financial planning Rob Hillock is of the view that "reforms such as the inclusion of pension assets in inheritance tax may be encouraging more savers to spend their pension or front-load withdrawals".

The highly anticipated autumn 2025 budget is of considerable concern with many taking steps now to reduce its impact.

This also links to the FCA's targeted support which is likely to result in pension providers telling customers that it is a bad idea to take such high withdrawals from their pensions.

To read more, please click here.

Regulatory developments for FCA regulated entities

FCA Releases Paper on Pure Protection Market

The Financial Conduct Authority (FCA) has published a paper on the UK pure protection market for retail customers.

Pure protection products are long-term insurance products designed to help individuals or their dependents with their existing financial commitments or lifestyle adaptions where the policyholder suffers an insured event. The paper focuses on whether the distribution of these products aligns with the FCA's operational objectives.

In the paper, the FCA outlines the structure of the UK pure protection market and notes that the market is highly concentrated. The top five insurers accounted for roughly 80% of the new business premiums in 2023, while distribution remains fragmented and heavily reliant on intermediaries. There are concerns that the commission structures, panel arrangements and re-broking practices associated with the industry's reliance on intermediaries may affect consumer interests, particularly given the increased consumer vulnerability in the market.

To read more, please click here.

FCA Proposes Integration of Cryptocurrency Firms into Regulatory Framework

The FCA has released a consultation paper outlining its plans to integrate cryptocurrency firms into its regulatory framework.

The paper highlighted that "traditional finance rules" will not be effective for the sector. However, the FCA has promised that the new standards will be "proportionate", without compromising on the agency's guiding principles.

The FCA is not aiming to "remove the risks of investing in crypto" but to ensure that firms meet the minimum standards on crime prevention, resilience and governance. So far, the proposals will largely mirror the operational and safeguarding requirements imposed on consumer credit providers rather than banks, given the sector's lower systemic risk profile with limited carve-outs in the FCA's high-level standards.

Additionally, the FCA is inviting views on the application of the FCA's Consumer Duty to the sector, and whether complaints can be escalated to the Financial Ombudsman Service.

To read the FCA's consultation paper, please click here.

FCA takes no further action over £135m collapsed property scheme

The FCA has announced that it will not take any further action against the property investment group, Wellesley & Co Limited (WCL), which collapsed in 2020 with sums owed to creditors of over £134m.

Throughout their 3-year investigation, the FCA noted WCL's promotion of high-risk investments relating to property development and acknowledged the fact that some investors suspected wrongdoing due to the value of the investments involved. The FCA found that WCL made investors aware of the risks involved, including that the investments would not be covered by the Financial Services Compensation Scheme, and did not find any evidence suggesting the funds were misused or fraudulently obtained.

To read more, please click here.

Sustainability Disclosure Requirements (SDR) change

The FCA have proposed a change to SDR to provide softer and more flexible requirements for index-tracking funds to qualify for sustainability labels.

The announcement, set out in CP25/24, aims to provide clarity on labelling rules and to ease annual reporting obligations in relation to sustainability products. The proposed changes are in response to industry feedback and concerns that the current SDR are complex and have a heavy compliance burden.

The proposed changes intend to reduce compliance burdens for firms whilst also maintaining consumer protection. The FCA will complete a further review in three years to see whether the proposals have met it's intended outcome.

To read more, click here.