Money Covered: The Week That Was – 2 April 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

Supreme Court reviews scope of principal liability for appointed representative’s dealings with retail clients

In Kession Capital Ltd (in Liquidation) v KVB Consultants Ltd and others, the Supreme Court considered whether an appointed representative agreement can limit a principal firm’s liability for the acts of its appointed representative in dealings with retail clients.

Kession Capital Ltd (KCL), an authorised firm, entered into an appointed representative agreement with Jacob Hopkins McKenzie Ltd (JHM) under section 39 FSMA. The agreement authorised JHM to carry on certain business on KCL’s behalf, but prohibited it from dealing with retail clients.

JHM later promoted and operated a number of property investment schemes. Investors, including KVB Consultants Ltd, invested around £1.7 million. When the schemes failed, claims were brought to recover those losses.

Summary judgment was entered against KCL on the basis that, under section 39 FSMA, it had assumed responsibility for JHM’s marketing of the schemes.

The Court of Appeal upheld that decision. It agreed that the agreement prohibited JHM from advising on and arranging the schemes, but held by majority that the agreement did not limit KCL’s liability for JHM’s acts and omissions in conducting business with retail clients. That latter issue was the subject of the appeal to the Supreme Court.

The Supreme Court upheld Kession's appeal, deciding unanimously that Kession (as principal) was not responsible for the advice given in respect of the investment schemes by JHM on the basis that they themselves did not have permission to give such advice, and JHM was expressly prevented from doing so under the AR agreement.

The case addresses an important question for authorised firms using appointed representatives - whether contractual limits in an AR agreement can narrow the statutory responsibility imposed by section 39 FSMA.

To read the decision, please click here.

Auditors

FRC publishes Annual Plan and Budget for 2026/27

The FRC has now published its Annual Plan and Budget for 2026/27. The document doesn’t contain any major surprises, but it does give a clearer indication of the regulator’s priorities for the coming year.

The focus remains on (1) audit supervision and enforcement, (2) support for smaller firms, and (3) work on wider issues affecting the market, including AI and ESG. The plan also points to further work on standards and guidance across audit, actuarial work and pensions, whilst also referring to changes to enforcement processes and the continued development of the FRC’s supervisory approach to audit oversight.

The FRC says it wants enforcement cases to move through the system more quickly, whilst continuing work intended to help smaller firms build capability and take on a greater role in the audit market. More broadly, the plan suggests continuity rather than any real change in direction, but it’s still a useful guide to where the FRC’s attention is likely to fall over the next 12 months.

To read RPC’s article in more detail, click here.

FRC issues guidance on the use of generative AI in audits

On Tuesday, the Financial Reporting Council (FRC), the audit watchdog, issued guidance to audit firms on the use of generative AI.  According to the FRC, this is the first such guidance on AI issued by any audit regulator globally.

The FRC emphasizes that the guidance has not been issued in response to any quality concerns in audit work already identified, but rather it "codifies good practice, promotes audit quality, builds confidence in the use of these technologies, and provides a conceptual foundation for future FRC work in this area."

Although the FRC is clearly not opposed to the careful and responsible use of AI in audits, it nevertheless reaffirmed that human auditors will bear the ultimate responsibility for the quality of audits, and careful attention will need to be paid to alleviating the inherent risks of generative AI, such as hallucinations.

To read the FRC's announcement and the guidance, click here.

Tax practitioners

UT allows SDLT overpayment relief claim despite calculation error

In BTR Core Fund JPUT v HMRC, the Upper Tribunal allowed an appeal, holding that an error in calculating SDLT was not a “mistake in a claim” for the purposes of the overpayment relief rules.

BTR had claimed Multiple Dwellings Relief in its SDLT return but, following HMRC guidance at the time, applied the higher residential rates and overpaid SDLT. After HMRC later changed its guidance, BTR sought overpayment relief. HMRC refused the claim on the basis that the overpayment arose from a mistake in the claim itself.

The UT rejected that argument. It held that the mistake was in the calculation of the SDLT liability, not in the making of the MDR claim. On that basis, the statutory exclusion did not apply and HMRC was required to give effect to the claim.

To read RPC’s article in more detail, click here.

Pensions

TPR publishes guidance on Virgin Media issues

TPR has issued guidance for trustees dealing with historic scheme amendments affected by the Virgin Media decision. The guidance accompanies the proposed changes in the Pension Schemes Bill, which are intended to allow schemes to obtain retrospective actuarial confirmation where section 37 confirmation is missing, or there is no evidence that it was obtained.

The guidance covers the steps trustees should now be considering, including whether the scheme is affected, what legal and actuarial input is needed, and how any remedial exercise should be scoped and documented. TPR also says it does not expect exhaustive searches for historic evidence before actuaries are instructed, and indicates that past failures to obtain section 37 confirmation are unlikely to be materially significant to its regulatory functions now.

To read RPC’s article in more detail, click here.

Pensions ombudsman confirms no duty on a scheme administrator to carry out extra due diligence

In the complaint by Mr N (CAS-69397-X3Y6) (30 January 2026), the deputy ombudsman dismissed the assertion that Mr N's defined benefit scheme administrator (the DBA) should have conducted further due diligence before allowing Mr N to transfer his pension.

Mr N was cold called by an advisor who offered a free pension scheme review. The pension advisors recommended the Mr N transfer his defined benefit pension into a small, self-administered pension scheme (SSAS) for higher returns.Mr N instructed his DBA to complete the transfer, and signed several documents which confirmed he was aware of the risk of pension fraud and that he had done is own research and had not been cold called.

Mr N's SSAS subsequently failed and his pension funds were lost. Mr N sought to complain against the DBA, alleging that the DBA failed to conduct adequate due diligence on the SSAS. This failure included not spotting the red flags of the SSAS, including that the SSAS was newly registered and the pension advisor was unregulated. Mr N maintained that his signature on the waiver prior to the transfer was not evidence that he adequately understood the risks involved.

The deputy pensions ombudsman dismissed Mr N's complaint and confirmed that the DBA completed the relevant checks and obtained assurances from Mr N as required of them. The DBA was under no further obligation, nor did they assume the responsibility to do so, to carry out further checks.

To read more, please clickhere.

FRCC report and FCA response bring renewed focus to BSPS

The Office of the Financial Regulators Complaints Commissioner (FRCC) has published its final report on the FCA’s oversight of the British Steel Pension Scheme (BSPS), with the FCA publishing its response on the same day. The two documents revisit the FCA’s handling of the BSPS transfer episode and, in particular, whether it acted quickly enough to protect members from unsuitable transfer advice.

The FRCC concluded that the FCA failed to protect former BSPS members from foreseeable harm. In particular, it found that the FCA had failed to:

• take preventative action by strengthening the regulatory framework or other consumer protection measures before the BSPS advice was given.
• intervene effectively during the “time to choose” period when unsuitable advice was being given to BSPS members; and
• respond with sufficient urgency once the damage had materialised.

The FRCC’s report also addresses complaints from former BSPS members about the FCA’s regulation of defined benefit transfer advice following the Tata Steel UK restructuring. It notes the FCA’s own estimate that almost half of the advice given was unsuitable, and recommends that the FCA revisit its decision not to uphold any of the complaints made against it.

The FCA says it has learned important lessons from BSPS and has already accepted and implemented recommendations arising from earlier reports. However, it does not accept the FRCC’s conclusion that it was behind the curve in anticipating, preventing and responding to widespread unsuitable advice. The FCA also maintains that the regulatory framework in place at the time was appropriate and designed to protect consumers, although it accepts that poor information-sharing between organisations affected early visibility of the issues.

The FRCC also recommended that the FCA consider evidence that some firms may not have complied with the three-month deadline for making redress offers following the valuation date. The FCA has accepted that recommendation and says it will consider any such evidence from complainants.

To read more, please click here.

FOS developments

FOS 2026/27 financial year priorities for a quicker clearer service

The Financial Ombudsman Service (FOS) has published its Plans and Budget for 2026/27, outlining the most significant operational transformation in its 25‑year history. Working with the FCA and government, the FOS is progressing an ambitious reform programme to refocus on its core role as a quick, informal alternative to the courts. A joint consultation with the FCA proposes updates to processes and greater transparency.

Over the coming year, the Ombudsman will prioritise making its service quicker, clearer and more accessible, including through enhanced digital tools that streamline customer journeys and free up caseworkers to focus their time on complaints. Complaint volumes are expected to fall to 199,000 new cases in 2026/27, driven by fewer motor finance commission and professional representative complaints, with 266,500 cases planned for resolution. To fund reforms amid inflationary pressures and reduced reserves, the compulsory levy will rise to £86m and case fees will increase, though overall costs will remain below 2023/24 levels.

See here for the Press Release and the full documents can be found here.

FOS increases case fees for 2026/27

As mentioned above, in the plans and budget for 2026/27, FOS has set out that its case fees will increase.

After two years of case fees and levies remaining the same, FOS has said that this is no longer sustainable as result of inflationary challenges, reduced reserves and the cost of implanting the largest reforms to FOS since its creation.

The increase will see respondent firms now charged £680 per case, up from £650 per case. For professional representatives which bring cases on behalf of consumers, if the case is decided in favour of the consumer, a professional representative will be charged a case fee of £80 and in circumstances where the case is decided in favour of the respondent firm, the professional representative will be charged a case fee of £260, with the respondent firm's case fee reduced to £500.

Further changes are also being made, which in the future will allow FOS to introduce differentiated case fees – including changing the free case allowance to a monetary value of £2,000 for both respondent firms and professional representatives.

To read more, please click here.

More on the proposed changes to FOS, including the 10-year complaint limit

Continuing with the FOS reforms, the some of the proposed changes designed to make complaint resolution quicker, more consistent and more predictable for firms and consumers include:

• a 10-year absolute time limit for bringing complaints to the FOS, subject to limited FCA exceptions.
• a new referral mechanism requiring the FOS to seek the FCA’s view where there is uncertainty over FCA rules or wider market implications.
• changes to the FOS’s fair and reasonable test, so that where firms have complied with relevant FCA rules they must be treated by the FOS as having acted fairly and reasonably.
• structural changes intended to improve consistency in FOS decision-making, including giving the Chief Ombudsman overall responsibility for determinations.
• a requirement for the FOS and FCA to publish regular thematic reports to help firms and consumers understand how certain complaints will be approached; and
• provision to ensure the FCA has the tools it needs to respond quickly and effectively to mass redress events where appropriate.

The consultation response also confirms that the FOS will not become a subsidiary of the FCA. Legislation is due to follow when Parliamentary time allows.

To read more, please click here.

Regulatory developments for FCA regulated entities

FCA release final policy statement on the motor finance consumer redress scheme

Following the consultation launched in October 2025, the FCA have introduced the motor finance consumer redress scheme for customers who were treated unfairly in taking out motor finance loans or leasing agreements between 2007 and 2024.

It is estimated that the average consumer will be entitled to £829 in redress per agreement entered into, giving a total costs to the industry of around £7.5bn - £9b. The overall estimate for the redress bill has decreased slightly from when the consultation opened, when the overall estimate was between £8bn and £11bn. The scope has also reduced, with around 12 million agreements now falling to the scheme, down from 14 million. Other changes include a move away from an automatic presumption of unfairness in some cases, along with different treatment now being applied to cases that pre and post-date 2014.

There will be a short implementation period so that firms can prepare to operate the scheme and start dealing with complaints. The implementation period for loans taken out from 1 April 2024 will be 30 June 2026 and 31 August 2026 for loans taken out earlier.

For consumers who complain before the implementation period ends, the lenders will have 3 months to confirm if redress is owed, and if so, how much. Consumers will then have 1 month to accept or challenge the redress calculation. For consumers who do not complain within the implementation period, lenders will within 6 months, invite the consumer to join the scheme and the consumer will have 6 months in order to do so.

It is intended that nearly all cases should be resolved by the end of 2027, which highlights the work that some lenders have been implementing ahead of the scheme being finalised.

To read more, please click here.

FCA leads cross regulator taskforce on motor finance claims

The FCA has also announced a new cross regulator taskforce to address poor practices by some claims management companies (CMCs) and law firms in relation to motor finance claims. The initiative brings together the FCA, SRA, ICO and ASA to share intelligence and take swift, co ordinated enforcement action using the full range of their powers. The taskforce will focus on tackling unsolicited and misleading advertising, meritless or duplicative claims, multiple representation, and unfair exit fees.

The FCA has reiterated that its forthcoming motor finance redress scheme will be free and that consumers do not need to use CMCs or law firms, which may take up to 30% of any compensation. Consumers are urged to avoid signing up with multiple representatives, be alert to potential scams and report nuisance calls, texts, and misleading adverts. Complaints about authorised CMCs or regulated law firms should follow established FCA, SRA and Legal Ombudsman routes.

See the FCA Press Release here.

Relevant case law updates

High Court finds auditors do not owe a common law duty to report directly to shareholders

The Chancery Division has refused an application by a claimant company for permission to re-amend its Particulars of Claim to expand its claim to allege that the defendant auditors owed a duty to report directly to individual shareholders.

Whilst the Court found that the new claim involved a new cause of action and was statute barred as it introduced new factual elements (such that it could not be said the claim arose out of the same facts as the original pleaded case), the relevant finding – for auditors at least – is that the Court found that the new cause of action had no real prospects of success. The Court held that auditors do not owe a common law duty to report direct to individual shareholders, even if there are suspicions of fraud on the part of the directors.

The decision was made in The Wine Enterprise Investment Scheme Ltd (in liquidation) (acting by Finbarr O' Connell and Colin Hardman in their capacity as Joint Liquidators) v Crowe UK LLP (formerly Crowe Clark Whitehill Llp) [2026] EWHC 692 (Ch).

To read the judgment, please clickhere.

Settlement agreement held to cover later £10 million-plus claim

The High Court has held that a settlement agreement entered into for £200,000 also extended to multi-lateral interchange fees related claims brought by a company that only became associated with the claimant after the agreement was signed.

The dispute arose from a settlement between Luxottica Retail UK Ltd and Visa companies in relation to interchange fee claims. After the agreement was executed, Grandvision - a company in which Luxottica’s parent later acquired a controlling interest - brought a further claim said to be worth more than £10 million. The Court found that, on the wording used, the agreement was wide enough to capture claims brought by associated companies, including those becoming associated after execution.

The Court rejected the argument that the settlement should be read more narrowly by reference to the original claim being settled. Instead, it placed weight on the breadth of the drafting and the absence of any express limitation. While Visa was entitled to declaratory relief and damages, the Court declined to order specific performance of the obligation to ensure withdrawal of the later claim.

To read the judgment, please click here.

With thanks to this week's contributors: Heather Buttifant, James Parsons, Brendan Marrinan, Ben Simmonds, Alison Thomas and Kerone Thomas

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