Money Covered: The Week That Was – 22 May 2026

Welcome to The Week That Was, a round-up of key events in the financial services sector over the last seven days.

Headline development

The Bank of England, FCA and HM Treasury issue joint statement on Frontier AI models and cyber resilience

Last Friday, the Bank of England, FCA, and HM Treasury published a joint statement regarding frontier AI models and the implications for cyber resilience.

They note that frontier AI is evolving rapidly, and this may "amplify cyber threats to firms’ safety and soundness, customers, market integrity, and financial stability" if it is used maliciously.

The statement confirms it is essential that firms have effective threat containment and cyber response capabilities as more advanced AI models become available. It suggests firms take the following actions:

• Governance and strategy. Firms should ensure boards and senior management understand frontier AI risks. Decisions on investment and resourcing should reflect the emerging threat, including increased exposure from end-of-life systems or those out of vendor support. Firms should also consider taking out appropriate insurance.
• Identification and risk management of vulnerabilities. Frontier AI models can rapidly identify and exploit a large number of vulnerabilities across firms’ technology estates. Firms should be able to triage, prioritise, risk assess, and remediate vulnerabilities more quickly, more frequently, and at scale.
• Managing risks from third parties. Firms should manage frontier AI cyber risks from third parties and supply chains, including open-source software.
• Protection. Firms should implement effective access management, network security, and data protection to reduce the attack surface a frontier AI model might access and limit the likelihood and impact of such attacks.
• Response and Recovery. Firms should be able to respond to and recover from disruption quickly. 

To read the statement please click here.

Insolvency

Insolvency Service publishes April 2026 insolvency statistics

The Insolvency Service has published its monthly insolvency statistics for April 2026 for England and Wales.

The data shows 2,085 company insolvencies in April 2026. This was 2% higher than March 2026 and 3% higher than April 2025. For individuals, there were 10,920 insolvencies, 10% lower than March 2026 but 7% higher than April 2025.

Key points to note:

• Company insolvencies reached their highest level since June 2024.
• April 2026 included 371 compulsory liquidations, 1,510 creditors’ voluntary liquidations, 183 administrations and 20 company voluntary arrangements.
• Individual insolvencies included 701 bankruptcies, 4,033 debt relief orders and 6,186 individual voluntary arrangements.
• There were 4,862 Breathing Space registrations, 33% lower than April 2025.
• R3 said businesses are facing pressure from higher labour costs, business rates, and fuel and energy costs.
• Hospitality, retail and leisure were identified as particularly affected.
• Late payment is also affecting cash flow, with more than 1.5 million businesses said to be affected; and
• Personal insolvency numbers remain above April 2025 levels, despite falling month on month.

R3 (the trade association for insolvency and restructuring professionals) said the current environment remains challenging for businesses and households, with geopolitical conflict, economic and political uncertainty, rising employer costs and pressure on disposable incomes all contributing to financial strain.

The figures indicate continuing demand for insolvency and restructuring advice, particularly where businesses face rising overheads, late payment issues or pressure from creditors.

To read more, please click here

Tax Practitioners

Mandatory registration with HMRC begins for some agents

The recently passed Finance Act 2026 (Part 7 and Schedules 20 and 21) requires businesses interacting with HMRC in respect of another person’s tax affairs to register as a tax adviser with HMRC (which has introduced a new digital registration system for this purpose).

Businesses interacting with HMRC about someone else’s tax affairs have three months from their start date to register with HMRC. The start date is 18 May 2026 unless a later start date applies.

The later start dates are:

• 18 August 2026 for businesses that have a self assessment or corporation tax account (i.e. an online services account (OSA)), but do not have an agent service account (ASA)).
• 18 November 2026 for businesses that only provide third-party payroll services on behalf of clients and do not interact with HMRC in any other way; and
• 31 December 2026 for financial services organisations.

The start dates do not apply to businesses with an ASA. Businesses with an ASA do not need to take any action yet. HMRC has confirmed it will contact these businesses through their ASA between 31 December 2026 and 31 March 2027 if more information is required.

To read more please click here.

Pensions

Pension Commission issues report on UK retirement savings

On 19 May, the Pensions Commissions issued its interim report (the Report) with a warning that currently, 15 million people (43% of the working-age population) in the UK are under saving for retirement. The Report referred to the vast improvements since auto-enrolment was introduced, and that the state pension continued to reduce poverty amongst pensioners, but that there are a growing number of pensioners facing financial challenges.

The Report also considered challenges faced by the UK pension system and confirmed that it will provide recommendations for the government on a "renewed national settlement on pensions" next year.

The Report noted that pension freedoms changes introduced in 2014 have brought about complex challenges for savers in deciding how to access their pensions, and that "stronger protections and a default decumulation approach to turn pension pots into incomes that sustain people throughout retirement" are required.

To read more, please click here.

FOS Developments

First House of Lords reading for the Financial Services and Markets Bill 2026-27 

The Financial Services and Markets Bill 2026-27 (FSM Bill) had its first reading in the House of Lords on 19 May 2026. This follows a commitment in the King's speech for Parliament to introduce the FSM Bill during the 2026-27 parliamentary year.

The FSM Bill, which is yet to be scheduled for the second reading, is expected to:

• Modernise and adjust the UK financial services regulatory framework across consumer credit, the Financial Ombudsman Service (FOS), the regulators’ governance/objectives/reporting, and market infrastructure.
• Change how the FOS operate and interacts with the FCA.
• The introduction of a 10 year time limit for bringing complaints.
• Introduce changes to the FOS' 'fair and reasonable' test.
• Restructure payments regulation by abolishing the Payment Systems Regulator and moving payment systems regulation into an expanded FCA regime.
• Tighten the appointed representative (AR) regime by creating a new FCA permission requirement for firms acting as principals.
• Add new tools/streams including overseas recognition regimes, ring fencing adjustments, commercial credit data sharing expansion, and powers relating to crypto assets and insurance vehicles.

To read the text published after the first reading, please click here.

Regulatory developments for FCA regulated entities

FCA seek views on AI use in practice 

The FCA has reopened its AI Input Zone website to understand what practitioners consider is 'good' use of AI. The responses received will be used to inform a good and poor practices publication on AI later this year.

The FCA are seeking information and examples on:

• What enables firms to develop and deploy safe and responsible AI.
• What stops firms from developing and deploying AI; and
• Themes and topics the FCA should address in its good and poor practice publication.

Examples are expected to include terms of AI governance, risk management, and reference to the consumer duty.

The deadline for providing a response is 19 June 2026.

To read more, please click here.

FSCS announces £35m cut to levy for advisers

After previously projecting that the levy for advisers for 2026/27 would be £109.8m, the Financial Services Compensation Scheme (FSCS) announced in its May 2026 Outlook that the levy is dropping to £74.9m. The FSCS explained that the reason for the cut was two-fold: there was a higher than expected balance brought forward from last year, and there have been fewer SIPP claims than expected in the last year.

The levy across all regulated firms has fallen from £342m to £247m, with the FSCS explaining that there have also been less high-value claims and more low-value or no-compensation-due claims.

To read the FSCS' May 2026 Outlook, click here.

FCA Director considers the problems in claims market conduct and fees

In a blog for the FCA, their Director of Consumer Finance has explored the emerging conduct and operational risks in the claims management market, noting that while CMCs and law firms can support access to redress, poor practice (seen particularly in car finance complaints) can harm consumers and the wider system.

Reported issues include unsolicited marketing (linked to 6 million ICO complaints), misleading social media adverts, hidden cancellation fees, lack of meaningful consent (including multiple sign-ups) and alleged fraudulent signatures.

Since the start of 2024, over 1,000 misleading car finance ads have been removed or amended; three CMCs have reduced unreasonable fees (protecting 500,000+ people) and four firms are currently restricted from taking new clients, with enforcement investigations ongoing. A joint taskforce with the SRA, ICO and ASA is under way, alongside a comprehensive market study examining advertising and customer support, value for money/price caps, incentives and funding (including offshore structures), financial resilience, and regulatory perimeter effects, aligned with wider work to make redress fairer and more predictable.

Click here to read the full blog.

FCA boosts regulatory support for financial services scale-ups

The FCA has expanded its Scale-up Unit so solo-regulated firms can apply for tailored support to help them scale sustainably. The Unit offers a dedicated point of contact and practical help navigating regulatory processes, developing innovative products and understanding policy change impacts. 

The FCA and PRA have already supported six dual-regulated firms in a pilot, using lessons learned to shape how it supports growth-stage firms and to inform wider policy and process improvements.

From a risk perspective, this may increase early regulator–firm engagement for innovative business models (potentially reducing authorisation/change friction), while giving the FCA additional market intelligence that could drive supervisory and rulemaking adjustments. Applications for FCA solo-regulated firms are open from 20 May to 22 June 2026.

Read the press release here.

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

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