Money Covered: The Week That Was – 21 August 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

Motor finance compensation scheme: FCA calls for more detailed delivery plans and stronger oversight

On 19 August 2026, the FCA published a new webpage providing feedback on firms’ implementation plans for its motor finance compensation scheme. The FCA shares examples of good and poor practice from its review, aimed at helping firms assess whether their planning, controls and oversight arrangements are sufficient to meet scheme requirements.

The FCA’s feedback focuses on key areas including operational readiness, population identification, approaches to grouping cases and group-based decision making, redress calculation and payment, and quality assurance and oversight. While the FCA found that most firms broadly understood the scheme’s requirements, it observed that many implementation plans were high level and lacked the detail needed to demonstrate credible delivery.

The FCA notes that some plans concentrated on future development and oversight, which made it impossible for the FCA to assess whether firms would be able to meet their obligations. It encourages firms to use the examples to make necessary changes, prioritise closing gaps where plans remain high level or where key elements are still being developed, and keep named motor finance supervisors updated on material developments. The FCA also reminds firms that, although the motor finance redress scheme is currently partially suspended, firms must still comply with all rules that are not suspended.

To read more, please click here.

Tax Practitioners

HMRC's updated guidance on mandatory tax advisors' registration for multiple businesses

HMRC has published updated guidance on how the mandatory registration requirement for tax advisers applies where multiple businesses are involved in providing tax advice to a single client. Under section 224 of the Finance Act 2026, registration is required where a person provides tax advice in the course of business and interacts with HMRC in that capacity.

The guidance confirms that it is crucial to identify which business is responsible for an interaction with HMRC, particularly in subcontracting, outsourcing, group and specialist-adviser arrangements.

A contractual relationship or fee arrangement alone will not determine responsibility. Where a specialist or subcontractor communicates with HMRC under the principal adviser’s authority and control, and the principal adviser remains responsible for the interaction, the interaction is treated as being made by the principal adviser. However, if the subcontractor assumes responsibility for communicating with HMRC or presents itself as acting for the client, it will itself be required to register.

The guidance is particularly relevant to firms outsourcing specialist tax advice, although the assessment will ultimately depend on the specific circumstances.

To read the HMRC's Mandatory Tax Adviser Registration, please click here.

Regulatory developments for FCA regulated entities

FCA issues warning on loan notes and mini bonds

The FCA has warned consumers that high-risk mini-bonds and unregulated loan notes can lead to significant losses, including the loss of an entire investment if the issuing firm fails. Mini-bonds and loan notes are ways for a company to borrow money directly from investors. They involve the investor lending the company a lump sum, with the company promising to pay interest and return capital at the end of a set period.

These investments can be high-risk because they’re often issued by smaller or unregulated firms, can be hard or impossible to sell before maturity, and if the company runs out of money or collapses, the investor could lose some or all of what they invested. Unlike a normal savings account, they are not protected if the issuer fails, and the advertised “fixed return” is only paid if the company can afford to pay it.

The FCA pointed to the collapse of litigation funder, Woodville Consultants, which raised money from retail investors through unregulated loan notes, as a reminder of how quickly these products can unravel. Whilst the FCA banned the marketing of speculative illiquid securities to retail investors from 2021, promotions still surface online - particularly on social media and investment websites.

Consumers are urged to look out for red flags such as pressure to invest quickly, vague explanations of downside risk, and claims that an investment is “asset-backed” without clear, detail. Additional concerns include unregulated introducers channelling individuals to investment firms, encouragement to self-certify as wealthy or sophisticated, unclear fee structures, conflicts of interest, and attempts to borrow credibility via links to regulated firms or overseas listings.

In addition, investors may not be able to use the Financial Ombudsman Service or the Financial Services Compensation Scheme if things go wrong, unless an authorised firm was involved in a regulated activity. The FCA recommends using its Firm Checker before investing and reporting any suspicious approaches.

To read more, please click here.

Financial crime controls under the spotlight: FCA points to governance and monitoring gaps at UK wealth firms

The FCA says it has identified “weaknesses” in some UK wealth managers’ financial crime controls, citing gaps in checks on clients’ wealth, transactions, political exposure, and sanctions. In its latest survey of around 400 wealth management firms, the regulator notes improvements in the frequency with which firms refresh “know your client” checks, but says some still fail to collect or verify information needed to identify potentially suspicious activity.

The FCA highlights shortcomings in basic customer risk data and monitoring inputs. It reports that 26% of firms did not collect information on how frequently they expected clients to transact, while 13% did not record expected investment amounts. Around 10% of firms did not verify clients’ source of wealth, which the FCA describes as a key check for understanding where a customer’s money has come from.

The regulator also points to weaknesses for higher-risk clients: around 6% of firms did not check whether clients were politically exposed persons and about 7% did not conduct sanctions screening, with some firms also failing to check adverse media. The FCA warns these gaps make it harder to identify suspicious activity and comply with legal obligations, and stresses that sector growth must be matched by clear governance and strong controls, alongside fair value, effective client support, and responsible use of technology, including artificial intelligence. It also noted that all surveyed firms now refresh client checks, but some still do not refresh higher-risk clients’ checks after trigger events or at least annually.

To read more, please click here.

Relevant case law updates

Court provides clarity on varying costs budgets in litigation

In the case Bassey v Whittaker & Watford Insurance Company [2026] EWHC 2126 (KB) useful guidance has been provided on the court's approach to costs budget variation.

The appeal arose in the context of a complex personal injury claim. The District Judge had approved each side's budget on 18 December 2024. The directions were later varied and the parties filed and served Precedent Ts to take account of the increased costs associated with the amendments. The preamble to the Order for a Costs Management Hearing stated that the amendments to the directions "were not a significant development within CPR 3.15A but [the Court] does not prevent the costs being increased."

The main question on appeal was whether, having found in the preamble that the varied directions were not a significant development under CPR 3.15A, the District Judge had power to vary the approved costs budget. The Judge ruled that the District Judge had no power to order a variation of the costs budgets when there had been no significant developments since the costs budgets had been finalised. The Judge ruled that the existence of significant developments since the costs budgets were approved were a necessary precondition before a costs budget could be varied, and this was made clear from the purpose, structure and language of CPR 3.15 and 3.15A. The Judge made clear that it would not be in the interests of justice or the overriding objective if there was scope for constant tinkering with budgets if there are developments; there must be a genuine and significant change in the litigation which warrants revision.

To read the decision in full, please click here.

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

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