Money Covered: The Week That Was – 23 May 2025

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

The third episode of Season 4 of our podcast, Money Covered – The Month That Was, where the team discusses developments that we expect to see in 2025 in relation to Financial Services and Accountants is now available.

To listen to this and all previous episodes, please click here.

Headline Developments

High Court Allows Appeal in Philips v National Grid Gas [2025] EWHC 693 (KB)

Mr Phillips ("the Claimant") was involved in an accident at work in 1999 injuring his back. He returned to work but was dismissed three days later on 1 August 2002 on the grounds of capability due to ill health. The Claimant therefore applied for an incapacity pension under the rules of his pension scheme but was told by the trustees that he was dismissed for capability, not incapacity.

The Claimant made a number of complaints to the trustees of the National Grid pension scheme. His complaint in 2009 resulted in National Grid ("the Defendant") agreeing to obtain a medical report before confirming its opinion as to whether the Claimant was entitled to an incapacity pension. No medical report was obtained.

In June 2022, the Claimant brought claims in negligence and breach of contract for the failure to provide him with an incapacity pension. The parties agreed that the relevant limitation period was six years from the date of the act or omission and the Defendant successfully applied for summary judgement on the basis the claims were statue barred.

The Claimant appealed. The High Court allowed the appeal on a limited basis. The Court decided that it was arguable that the Defendant should have obtained a medical report in 2009 (following it stating that it would do so) and that this should have been obtained within a reasonable time. . Had the Defendant done so, Lavender J held that this would have concluded that the Claimant had been dismissed for incapacity. 

Again, the scope of the duty was to provide an opinion in a reasonable time. As to what was a reasonable time (and if it had expired six years before the Claim Form being issued), Lavender J considered it was not appropriate for the point to be determined on the evidence available at that time, as it had not been considered in the judgement at first instance and the parties had not adduced evidence and statements in relation to the same.

To read more please click here.

 Accountants

ICAEW update Code of Ethics

The ICAEW have published their updated Code of Ethics which aims to build trust and provide clarity to members as to how they should behave as professionals. As readers will be aware, ICAEW members must adhere to the Code of Ethics. The updated Code of Ethics is effective from 1 July 2025. 

The ICAEW have set out their expectations for members regarding their conduct in their professional and personal lives. Notably for members, a significant change has been made to subsection 115 (A2) of the Code of Ethics which now reads as follows: 

“A reasonable and informed third party would expect that a professional accountant, in their professional life, treats others fairly, with respect and dignity and for example does not bully, harass, victimise or unfairly discriminate against others.”

Notably, this now includes a ‘reasonable and informed third party’ test. A 'reasonable and informed third party" has been clarified to be a party who "possess the knowledge and experience to evaluate the appropriateness of a professional accountant’s conclusions objectively and impartially".

The purpose of the update to the Code of Ethics is to assist members and firms in identifying conduct issues, so that they can report any misconduct in a timely manner as part of their ongoing professional obligations. 

The ICAEW have also provided examples of conduct which is unlikely to be reportable. However, this is determinable on a case-by-case basis. Examples include: 

• A personal family dispute.

• Disputes involving friends (including offensive language) in a private environment.

• Personal social media posts with no link to the profession that express political opinions or views that are not offensive.

• Private employment or civil disputes. 

The regulator has urged members to read the updated Code of Ethics which you can find here. 

HMRC increases its compliance yield from wealthy individuals by £3 billion

In its latest report, the National Audit Office ("NAO") has confirmed that HMRC collected or protected £5.2 billion in tax from wealthy individuals in the 2023/24 tax year, that would otherwise have been lost. This figure is up from the £2.2 billion in 2019/20 tax year. HMRC defines wealthy individuals as those earning more than £200,000, or with assets over £2 million, in any of the last three years. There are currently 850,000 wealthy individuals in the UK.

The NAO highlighted that each investigation launched by HMRC's wealthy team brought in £93,800 on average in 2023/24, up from £34,100 in 2018/19, which illustrates HMRC's focus on high value cases. It was also noted that 73% of wealthy individuals were represented by a tax agent, and it is recommended that HMRC should improve its understanding of how such agents influence compliance. However, the NAO has noted that HMRC's annual estimate of the wealthy tax gap was £1.9 billion. The £3 billion increase between 2019/20 to 2023/24 suggests HMRC have underestimated underlying levels of non-compliance among the wealthy. 

To read more, please click here.

Auditors 

FRC releases additional resources in support of its SME audit campaign

The Financial Reporting Council (FRC) has released new resources to help small and medium-sized enterprises (SMEs) better understand and engage with the audit process. These include a summary document outlining key audit principles and public interest benefits, as well as a podcast discussing how audits build trust and transparency in financial reporting.

The summary document What is an Audit? highlights the value audits bring in promoting transparency, trust, and accountability for a wide range of stakeholders, including investors, employees, and suppliers. The document outlines key audit principles such as independent, professional scepticism, and a risk-based approach, and emphasises the broader benefits audits offer to businesses, including improved access to capital and stronger internal controls.

To read the summary document, please click here; to listen to the podcase, please click here.

Pensions 

Traffic light system for pensions being reconsidered

According to CityWire, the government and the FCA are reconsidering whether to introduce a traffic light system to rate workplace pension schemes. The traffic light system was revealed last summer as part of the value for money framework. The plan was for workplace pension schemes to be publicly ranked by various metrics including costs, charges, investment performance and service quality, with each scheme being given a green, amber or red rating. It was proposed that schemes rated amber or red would be prevented from taking on new corporate pension business and would have to submit an improvement plan to the FCA.

In its place, it is understood that the government and FCA are now favouring a more refined system. The potential change of course by the government and FCA has been prompted by an industry pushback with concerns that the system was overly simplistic and was at odds with the government's wider aim of ensuring economic growth.

To read more, please click here.

Regulatory developments for FCA regulated entities

FCA to loosen complaints data reporting requirements

The Financial Conduct Authority (FCA) has this week announced plans, via a consultation paper, to lessen the burden of complaints reporting on regulated firms by creating efficiencies in the process – in particular, by compressing the five separate filings currently required into one.

It hopes that this will enable it to regulate more effectively – namely, by improving data quality received as a less complex process reduces the rate of errors made in reporting; and consequently enabling a quicker response on the FCA's part.

Initial reactions have been generally positive, but the consultation remains open until 24 July.

You can read and respond to the consultation paper here.

 With thanks to this week's contributors: Rebekah Bayliss, Shauna Giddens, Haiying Li, Nitin Mathias, Damien O'Malley, Daniel Parkin, Faheem Pervez, and Joe Towse.