Money Covered: The Week That Was – 23 January 2026

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

Our latest edition of the Financial Ombudsman Newsletter is out now and can be found here.

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.

Headline development

Supreme Court allows appeal in 'half-secret' commissions case

In March 2025, amid the uncertainty of the motor finance commission cases last year, the case of Expert Tooling and Automation Ltd v Engie Power Ltd [2025] EWCA Civ 292 (Expert Tooling) was decided by the Court of Appeal.  The case concerned "half secret" commissions paid to a broker on energy contracts.  

The Court of Appeal had previously found against Expert Tooling, deciding that Engie should be primarily liable to them as an accessory to the broker's breach of fiduciary duty on the basis that the commission was "half secret," and Engie was not liable to Expert Tooling in equity because the Court of Appeal made no finding of dishonesty.  Expert Tooling then obtained permission to appeal to the Supreme Court, specifically querying whether the Court of Appeal was right to make a distinction between "fully secret" and "half secret" commission cases.

However, the Supreme Court decision in Hopcraft v Close Brothers Ltd [2025] UKSC 33 held that there was no distinction between "fully secret" and "half secret" cases, such that only full and complete disclosure of all material facts could allow a party to escape accessory liability, both in equity and at common law.  

Given the Hopcraft judgment, both parties in Expert Tooling agreed that Expert Tooling's appeal should be allowed, and the Supreme Court confirmed the decision this week.  

To read more on the background of Expert Tooling, read our previous blog here.  For more details on the Supreme Court's decision, click here.

Auditors

Labour announces Audit Reform Bill is scrapped

On Tuesday 20 January, Labour announced that the Audit Reform and Corporate Governance Bill was no longer on its agenda.

The proposed reforms, which have been pursued inconsistently by Governments since 2018, would have seen the Financial Reporting Council (FRC), replaced by a new regulator, the Audit, Reporting and Governance Authority (ARGA), which would have had expanded powers beyond those currently held by the FRC.   

The Government explained the change in policy by stating that it took the decision in order to avoid costs to firms, and explained that instead of pursuing the reforms, it would instead continue with plans to allow virtual annual general meetings, streamline corporate reporting, and open a consultation aimed at increasing the efficiency of competition investigations.

To read more, click here.

ICAEW responds to scrapping of audit reform bill

On 20 January 2026, ICAEW commented on the Government’s decision to scrap the audit and corporate governance reform bill.

Alan Vallance, Chief Executive of ICAEW, expressed disappointment at the announcement, noting that it comes eight years after the collapse of Carillion and follows several earlier reform delays. He highlighted that the Government had previously acknowledged the role of audit reform in strengthening investor confidence and supporting economic growth.

Vallance noted that, despite the bill being dropped, audit quality and governance have significantly improved since 2018, driven by changes within the profession.

He emphasised the importance of giving the FRC the necessary powers to act effectively as regulator, and confirmed ICAEW will continue working with the Government, the FRC and firms to ensure those powers are in place.

To read more, please click here.

FRC publishes statement on priorities for 2026

The Chief Executive of the Financial Reporting Council (FRC), Richard Moriarty, has published a statement setting out the FRC's priorities for 2026.

The FRC stated its intention to continue pursuing the five priorities (previously set out in a letter to the Secretary of State for Business and Trade) for supporting economic growth in the UK, through strengthening investor confidence through high quality audits and transparent reporting. The five priorities are as follows:

• Underpinning investor confidence in the UK plc.
• Reducing unnecessary burdens on business while maintaining high standards.
• Developing deep insight into the markets the FRC oversees so its regulation is based on evidence and expertise.
• Identifying future trends and innovations to support the health of the markets the FRC oversees; and
• Supporting the skills and resilience of the professions the FRC regulates.

Moriarty reflected on the fact that the FRC had changed significantly over the last 10 years but acknowledged that there is a continuing need to evolve, whilst also welcoming the Government's renewed commitment to putting the FRC on a statutory footing.

The statement emphasised the FRC's commitment to reducing administrative burdens – noting that the updated Stewardship Code could result in reduced reporting by 30%, and that guidance associated with the UK Corporate Governance Code has been reduced by 20%.

Moriarty confirmed the FRC's aim to continue working closely with stakeholders to progress the Future of Audit Supervision Strategy and End-to-End Enforcement Review, with a view to developing a system-focussed and more proportionate approach.

As for small and medium-sized enterprises, the FRC committed to publishing guidance which will aim to assist auditors produce work scaled appropriately to the complexity of smaller businesses, and to ensure a consistent, proportionate approach is taken.

Morarity closed the statement by referring to AI, noting that through the recently launched Innovation and Improvement Hub, the FRC will continue to work with companies to reduce the length of annual reports, and to explore how AI might shape the future of audit.

To read the FRC's statement, please click here.

Insolvency practitioners

Insolvency Service releases monthly insolvency statistics for December 2025

December 2025 saw opposing insolvency trends in the UK, with business failures continuing to ease while personal insolvencies remain high.

The statistics show that 1,671 companies entered administration in December 2025 –13% lower than in December 2024. In contrast, individual insolvencies remained high – 13,453 personal insolvencies were registered in December 2025 (higher than in November 2025), a figure bolstered by a backlog of individual voluntary arrangements (IVAs) being processed late following the introduction of a new case management system.

Taking the year as a whole, personal insolvencies climbed to 126,240 cases – 7% higher than 2024 and the highest annual total since 2010. This is of course reflective of the ongoing financial pressures on households, even as the corporate sector shows some resilience. Economic factors such as the cost-of-living crisis and rising debt levels have all contributed to shape the data.

To read more, please click here. 

Brokers

BIBA calls for new Financial Services Bill in 2026 manifesto

The British Insurance Brokers’ Association (BIBA) has launched its 2026 Manifesto – titled 'Economic Resilience' – with a call for the Government to introduce a new Financial Services Bill in early 2026 as its number one ask.

BIBA insists a new bill is required to carry out the proposals they are working on with the Treasury including cross-cutting reforms, the simplification of the senior managers and certification regime, a review of the remit and operation of the Financial Ombudsman Service changes, and shortening statutory authorisation periods.

The manifesto calls for:

1. The introduction of a new Financial Services Bill in early 2026 by the Government.
2. For the FCA to continue the momentum on simplifying the insurance rules in early 2026 to further reduce the frictional cost of regulation).
3. Further simplification of the FCA rulebook and reporting requirements and to minimise ad-hoc data requests from the FCA.
4. The promotion of cyber insurance as a key pillar of building cyber resilience.
5. For there to be no increase in Insurance Premium Tax (IPT) over the course of this Parliament, while creating an IPT carve out for cyber insurance to encourage uptake.
6. For the industry to work together with the Government to reduce flood risk and secure long term, sustainable flood insurance capacity.
7. Roll-out of total retail signposting.
8. The introduction of new fair value product information exchange templates; and
9. For the review of FOS to ensure its role is that of a simple, impartial dispute resolution service.

BIBA's key commitments for 2026 are:

1. Promoting the value of insurance brokers by running another 'Ben the Broker' campaign.
2. Working to expand insurance broker understanding of AI by establishing an AI training school for BIBA members.
3. Encouraging new entrants into insurance broking by creating a new starting-up in broking guide.
4. Building a directory of brokers able to advise on, and place, cyber risk and signpost businesses to it.
5. Progressing BIBA’s schools’ initiative and working with the CII on a talent and skills programme to grow a pipeline of new entrants and returnees to the sector.
6. Continuing to work with Gracechurch on insurer service.
7. Dedicating time and resource to achieve social commitments.
8. Educating SMEs on insurance and the benefits of using an insurance broker by publishing and promoting new guidance.
9. Supporting members with their own professional indemnity (PI) by delivering a new guide to brokers’ PI risks; and
10. Supporting leaseholders through the programme of work with MHCLG

To access BIBA's manifesto please click here. 

FOS developments

FOS announces new interest rate on compensation awards

The Financial Ombudsman Service (FOS) has implemented a new interest rate on compensation awarded by the FOS for cases referred from 1 January 2026. 

The default interest rate has been revised to track the Bank of England's base rate plus one percentage point and is calculated as a weighted average typically from when the money was due until redress is paid. 

The FOS have provided a calculator to assist businesses in understanding how much interest, using the new rate, may be due.

To read more, please click here. 

Regulatory developments for FCA regulated entities

FCA issue further final decision on British Steel Pension Scheme advisor

On 19 January 2026, the Financial Conduct Authority (FCA) published the final notice in relation to Mr. Darren Anthony Reynolds and the advice that he had provided to his clients on transfers from the British Steel Pension Scheme (BSPS).

The notice imposed a penalty of £2,037,892 and made an order prohibiting Mr Reynolds from performing any regulated activity. 

The prohibition was issued due to Mr Reynolds' conduct as an approved person at Active Wealth which was authorised to advise on investments, pension transfers and arrange investment deals.  Mr Reynolds was solely responsible for the management and oversight of Active Wealth's conduct. During his tenure, he had authorised the receipt of prohibited commission payments derived from investments made by Active Wealth's customers, dishonestly advised Active Wealth's customers to invest in inappropriate investments and transfer out of BSPS which was contrary to their best interests, and knowingly allowed two unauthorised persons to provide pensions advice. 

The final notice reflects that Mr. Reynolds' appeal of the FCA's initial decision notice to the Upper Tribunal (Tax and Chancery Chamber) was unsuccessful with the Tribunal affirming the FCA's decision. 

To read more, please click here. 

FCA reviews how smaller mutual life insurers are meeting Consumer Duty standards

On 16 January 2026, the FCA published the results of a multi-firm review into how smaller mutual life insurers are implementing the Consumer Duty and delivering appropriate outcomes for their customers.

The review identified a mix of practices across the sector:

1. Target Market Statements – while most firms showed a clear focus on understanding their customers, many relied on broad or generic target market descriptions. Some lacked sufficient explanation around when a product might be unsuitable.
2. Fair value assessments – although value assessments were commonly in place, firms often focused on a single aspect of the product or service. This limited the scope of their analysis and failed to reflect overall product quality.
3. Fair treatment of with-profit policyholders– some firms showed a good grasp of the outcomes being delivered for with-profits customers. However, many did not clearly link their business strategy to the FCA’s requirements under COBS 20.2.
4. Financial operating models– all firms emphasised the importance of putting customers first, but approached assessing their own viability differently. In some cases, reviews lacked the depth needed to support meaningful strategic decision-making.

The FCA confirmed it will continue monitoring how firms are responding to the Consumer Duty, particularly in relation to price and value. It also referenced it's 2024 review of larger insurers and signalled further work assessing how firms are tracking and evidencing outcomes.

To read more, please click here.

With thanks to this week's contributors: James Parsons, Alison Thomas, Daniel Goh, Heather Buttifant, Ben Simmonds, Kerone Thomas,  Rebekah Bayliss

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