Money Covered: The Week That Was – 24 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

FCA's motor finance redress scheme faces challenge

The FCA’s proposed motor finance redress scheme is facing a potential challenge before the Upper Tribunal, after Consumer Voice said it would seek a review of the FCA’s proposed compensation methodology.

The scheme applies to certain motor finance agreements entered into between April 2007 and November 2024 where commission was paid by the lender to the broker. The FCA has estimated that firms could pay around £7.5bn in compensation under the scheme, down from the £8.2bn figure previously set out in its consultation.

The proposed challenge concerns how compensation would be calculated. Consumer Voice argues that the FCA has placed too much weight on the Supreme Court’s decision in Johnson v FirstRand Bank Ltd when identifying cases that should receive full commission redress. It says that approach would exclude the majority of consumer complaints from receiving that level of compensation.

Consumer Voice also criticises the FCA’s proposed use of annual percentage rate benchmarks, arguing that they understate consumer harm. It says most motorists would instead receive compensation under a hybrid calculation which, in its view, is flawed and too favourable to lenders.

The FCA has defended the scheme, describing it as the quickest and fairest way to compensate consumers. It has also warned that a legal challenge could delay payments to millions of people.

Consumer Voice is represented by Courmacs Legal and intends to bring the challenge in the Tax and Chancery Chamber of the Upper Tribunal. It has said the scheme should begin operating while the Tribunal considers the challenge, but without the disputed redress rules taking effect.

Insolvency practitioners

Insolvency Service releases monthly insolvency stats for March 2026

The Insolvency Service has published its insolvency statistics for March 2026 in England and Wales. The data reveals that corporate and individual insolvencies have increased compared to the prior month and this time last year. Company insolvencies increased by 7% and individual insolvencies increased by 3%. The significant change however is the increase in individual insolvencies when compared to March 2025, which are up by 30%.

Tom Russell, President of R3, explained that both individuals and companies are feeling the impact of the "worsening economic situation" with energy and fuel costs rising at a time where people are spending more cautiously.

Given that it is unlikely that conditions will return to normal any time soon, it is likely that there will be a greater demand on professionals to provide insolvency advice and support against a backdrop of prolonged financial pressure. 

To read more, please click here. 

Pensions

TPR highlights growing role of actuaries as pensions system evolves

The Pensions Regulator has said actuaries will play an increasingly central role as the UK pensions system places greater emphasis on the outcomes members achieve in retirement, rather than participation and accumulation alone.

Speaking at the Association of Consulting Actuaries’ 75th anniversary chair’s dinner on 22 April 2026, TPR chief executive Nausicaa Delfas said auto-enrolment had brought millions more people into pension saving, but that saving alone does not guarantee retirement security. She noted that too many members remain on course for inadequate retirement outcomes and said the focus now needs to be on turning pension savings into sustainable retirement income.

Delfas said actuarial judgment remains important as pensions become more closely linked to financial wellbeing and economic growth. She highlighted defined contribution pensions in particular, where there is growing focus on retirement products, decumulation pathways and value for money assessments.

She said actuaries would also have a role in helping trustees design investment strategies, develop decumulation options and strengthen scheme governance. Delfas also pointed to collective defined contribution schemes as an area of potential innovation, provided they are properly designed, governed and communicated.

She added that actuarial independence and rigour will remain important as actuaries help trustees navigate a more complex pensions landscape.

To read more, please click here.

Regulatory developments for FCA regulated entities

FCA announces second cohort of firms to participate in live AI testing

On 21 April, the FCA announced the second cohort of firms who have been selected to participate in their live AI testing.  The eight firms selected include Lloyds Banking Group, Experian, and Barclays.  

The FCA partnered with Advai, a specialist in automated AI assurance, to carry out the testing. The aim of the testing is to "support the responsible deployment of AI for consumers and market."  

The FCA confirmed that it also intends to publish a report later this year outlining good and poor AI practices for firms to further support them in responsibly utilising AI.  

To read the FCA's announcement, click here.

FCA calls in principals to improve oversight of inactive appointed representatives

The FCA has published a review calling on principal firms to strengthen oversight of inactive appointed representatives (ARs) following a supervisory review which identified gaps in governance, reporting, and consumer protection.

The FCA's publication confirms that principals still need to have effective oversight of their ARs and cannot rely on transaction oversight as a source of information, and noted that an unexplained lack of reported regulated activity is an indicator of weaknesses in principals’ management of its ARs. 

The FCA has confirmed it expects principals to take the following action in respect of inactive ARs:

• "Consider AR arrangements where ARs are not routinely carrying out regulated activities and reflect on whether oversight, monitoring and governance practices remain appropriate.
• Provide accurate and clear explanations in REP025 regulatory returns where ARs have not carried out regulated activities during the specific reporting period.
• Take timely action to terminate AR relationships where they are no longer appropriate and notify the FCA when the status of the relationship changes."

The report identified bad practice by principals including:

• Lack of engagement with ARs - some principals did not understand their ARs' business models, and could not explain why their ARs had conducted no regulated activity for a period of time.
• Insufficient modelling of ARs' consumer-facing materials - some principals did not properly monitor how ARs present themselves to consumers, increasing the risk of consumers being misled about ARs' regulatory status.
• Non-compliant AR agreements - in some cases, AR agreements did not meet regulatory requirements. This included principals not clearly accepting responsibility for the regulated activities carried on by ARs and not including required terms set out in or under Section 39 of FSMA and SUP 12.5.

To read more on this, including good practice recommendations, please click here to see the FCA's review. 

FCA publishes innovation insights report for 2025

Following the first year of the FCA's 2025 - 2030 strategy for supporting growth, fighting financial crime, helping consumers navigate their financial lives and becoming a smarter regulator, on 20 April 2026, the FCA published its innovation insights report for 2025.

The FCA states that enabling innovation to develop responsibly at a pace remains a core part of this strategy, and that it is sharing these insights to support earlier, clearer regulatory engagement, and strengthen evidence-led policy and supervision.

In the report, the FCA sets out what it has achieved over the past year, including strengthening its position in open finance, supporting growth in emerging areas such as stablecoins and digital assets and participating in over 70 keynote sessions, panels and roundtables at major fintech events.

The FCA states that the challenge has shifted from developing products to understanding how regulations apply to them, and that firms that engage safely and earlier find themselves better placed to scale responsibly.

The FCA has said that throughout 2026, it will prioritise:

• Being clearer about what it wants to see in testing and use more cohort-based testing.
• Increasing its engagement across the UK.
• Working closer with government to support UK competitiveness and international growth.
• Encouraging greater engagement from incumbents, particularly in wholesale markets and general insurance.
• Launching the solo regulated Scale-up unit.
• Continuing to share insights with the market.

To read the FCA's report, please click here.

FCA findings on Consumer Duty Board reports show progress and persistent gaps 

The FCA’s latest review of Consumer Duty Board reports shows clear progress between years 1 and 2, with stronger governance, clearer Board oversight and better defined action plans with accountable owners and timelines. Firms are using broader data sets, including trend and root cause analysis and improved monitoring of vulnerable customers, to evidence customer outcomes.

However, the FCA highlights continuing weaknesses. Many firms still fail to link management information clearly to customer outcomes or to draw robust conclusions about emerging risks and fair value. Oversight of outcomes in distribution chains (including intermediaries and outsourced providers) is often limited, and documented 'Board challenge' is frequently thin. Assessment of consumer understanding and support lags behind product, service and value analysis.

Ahead of year 3 reporting, firms are expected to strengthen outcome monitoring, governance, distribution, oversight and evidence of Board challenge, with the FCA planning further guidance and best practice examples.

To read more, please click here.

FCA reviews market soundings in listed share transactions 

On 20 April 2026, the FCA published the results of its review into how wholesale banks use market soundings in UK equity capital market transactions involving listed shares.

Market soundings allow firms to test potential investor interest before a transaction is announced. They can also help firms assess likely pricing. However, where the process involves sharing inside information, firms must ensure that the requirements of Article 11 of the UK Market Abuse Regulation are satisfied.

The review was prompted by earlier FCA supervisory work, which had found examples of transactions where a sizeable pool of investors had been approached before announcement. The FCA therefore looked at a broader range of transactions to assess whether the use of market soundings was having any adverse effect on market quality.

As part of the review, the FCA considered who was involved in the sounding process within banks, how long the soundings lasted, and the kinds of transactions for which soundings were used. The FCA found that:

• trading volumes dropped by an average of 13% while soundings were taking place, although the FCA did not find a material impact on other market quality indicators, including spreads or market depth.
• firms were able to complete transactions across a range of different sizes, which the FCA considered consistent with UK equity markets being able to absorb sizeable transactions; and
• the FCA does not impose a numerical cap on the investors who may be sounded, but firms should recognise that wider soundings may increase the risk of inside information being leaked. Firms should check that their policies and procedures properly address that risk.

The FCA also used the review to gather views on the market soundings regime under Article 11 of UK MAR. Most banks said the regime is sufficiently clear. Some suggested changes, including closer alignment with the EU regime and a lighter approach to record-keeping. The FCA has said it will consider those points when assessing any future amendments to UK MAR.

The FCA intends to continue engaging with banks and other market participants on this issue. It may also test firms’ systems, controls and approach to market soundings through future supervisory work.

To read more, please click here.

FCA and PRA announce reforms to streamline the SMCR

The FCA and PRA have announced joint reforms to the Senior Managers and Certification Regime (SMCR), aimed at reducing compliance costs and increasing flexibility for firms while maintaining high standards of financial sector governance.

Key changes include:

1. Giving firms more time, up to 12 weeks, to submit senior manager applications where there have been unexpected or temporary changes; and

2. Removing the need to certify individuals separately for multiple overlapping functions, which the regulators expect to reduce the number of certified roles by close to 15%.

The reforms also streamline annual “fit and proper” checks and increase the thresholds for enhanced firms by around 30%, meaning the enhanced regime will apply only to larger and more complex firms. Senior management roles and responsibilities are being clarified, certain submission deadlines are being extended, and the validity period for criminal record checks for senior managers is being increased.

The changes form part of a broader move to make the SMCR more proportionate and easier for firms to navigate. They are being positioned as a first step ahead of wider reforms under the government’s Leeds Reforms, under which the regulators intend to consult on measures designed to roughly halve the overall regulatory burden created by the SMCR.

The reforms will be relevant to FCA and PRA-regulated firms, particularly those currently within the enhanced regime or managing multiple senior manager and certification functions. Firms should consider whether the changes affect their internal governance arrangements, certification processes and timetable for regulatory submissions.

To read more, please click here.

Relevant case law updates

High Court confirms legal advice privilege can apply to intra-client communications 

The High Court has held that legal advice privilege may apply to internal client documents created or circulated within the relevant client group, provided their dominant purpose is to obtain legal advice.

The decision is significant because it distinguishes the well-known decision in Three Rivers District Council v Bank of England (No 5), which has often been treated as limiting legal advice privilege to communications between lawyers and the specific individuals authorised to seek and receive advice on behalf of a corporate client.

In Aabar Holdings SARL v Glencore plc, the claimant sought disclosure of documents over which the first defendant had claimed legal advice privilege. The claimant argued that the documents were not privileged because they consisted of communications between members of the client group, rather than communications directly with lawyers.

Picken J rejected that argument. He found that Three Rivers (No 5) did not address the particular issue before the Court, namely whether privilege could attach to internal documents within the client group where the dominant purpose was to seek legal advice. On that basis, Three Rivers (No 5) was distinguishable.

The Court held that there was no principled reason to deny privilege to intra-client documents created for the purpose of identifying facts to be passed to lawyers, or issues on which legal advice would be sought. Such documents could attract privilege in the same way as lawyers’ working papers.

The decision was also supported by later appellate authority, including SFO v ENRC and R (Jet2.com Ltd) v CAA, in which doubts had been expressed about the correctness of Three Rivers (No 5). However, Three Rivers (No 5) remains binding where it applies.

High Court determines compensation for employee denied right to exercise share options

In Dixon v GlobalData PLC, the High Court considered the compensation payable after finding that a claimant was entitled to relief in respect of share options which he had been assured would remain exercisable after his employment ended.

In the earlier decision, the Court held that the claimant had established a proprietary estoppel claim. GlobalData had assured him that, despite the termination of his employment, his share options would remain available. The claimant relied on that assurance by extending his employment for three months and accepting restrictive covenants. When he later sought to exercise the options, GlobalData said they had lapsed on termination.

The latest judgment addressed the proper measure of equitable compensation. The Court had to decide how the claimant’s “tranche 2” options should be valued and whether his “tranche 3” options should also be included.

On valuation, the claimant argued that compensation should be assessed by reference to the market price of GlobalData’s shares at the date on which the company refused to allow him to exercise the options. The Court rejected that approach. Applying Guest v Guest, it held that compensation should instead be calculated by reference to the lower price actually used for other option holders who exercised and sold through a bulk sale process. That approach better reflected the assurance that the claimant would be treated in the same way as other plan participants, without putting him in a better position than them.

The Court also held that the “tranche 3” options should be included. Although those were replacement options granted in 2021 after the original 10-year plan had expired, and had not been granted to the claimant because he was no longer employed, the Court found that it would be unconscionable to exclude him where other continuing plan members had received replacement options.

The claimant was therefore awarded equitable compensation for both tranches 2 and 3, calculated by reference to the market price used to calculate the sale proceeds received by other option holders in the bulk sale process.

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