Money Covered: The Week That Was – 24 October 2025

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

The fourth episode of Season 4 of our podcast, Money Covered – The Month That Was, where the team looks at Employment Practices Liability insurance and its relationship to Directors & Officers insurance, is now available.

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

Headline development

HMRC's tax warning letters to crypto investors increase by 134%

Research by UHY Hacker Young has revealed that the number of warning letters issued by HMRC in relation to tax owed on cryptocurrency rose by 134% in the 2024/25 tax year (to 65,000 from 27,700 the previous year). 

The firm noted there had been a sharp rise in cryptocurrency investment since 2023 and in turn the amount of undeclared capital gains tax on those assets, which could be substantial where an estimated 7 million taxpayers hold an estimated £12.9m in crypto. 

The rise in these 'nudge' letters would suggest HMRC is clamping down on crypto investors it considers have underpaid tax. One issue is that some crypto investors will not realise that they should have declared their gains. The tax rules can also be unclear particularly when it comes to determining when an individual should pay income tax (if HMRC classifies investors as "traders") rather than capital gains tax payable on the disposal of the assets.

Accountants and auditors

ICAEW warns against FCA’s new role in AML supervision for business 

The UK government has announced plans to transfer responsibility for anti-money laundering (AML) and counter-terrorism financing (CTF) supervision of accountancy and legal firms to the Financial Conduct Authority (FCA). The FCA would oversee around 60,000 additional firms, on top of the 17,000 it already supervises. Currently, 22 professional body supervisors (PBSs) carry out this work, including ICAEW, which supervises about 10,000 firms. 

ICAEW has criticised the move, warning that it will increase compliance costs, regulatory confusion, and fragmentation, whilst diminishing the effectiveness of supervision. The decision follows HM Treasury’s 2022 review and consultation, which considered four reform models. The government has chosen the third option - creating a single professional services supervisor for both sectors. 

ICAEW argues this approach risks losing essential expertise and will take years to achieve the same level of effectiveness as the current PBs-led system. ICAEW plans to continue engaging with ministers to seek alternatives.

To read more about ICAEW's viewpoint on the proposed changes, please click here. 

FRC issues two thematic review into corporate reporting

On 21 October 2025, the FRC issued two thematic reviews with a view to providing insights into and improving the quality of – (1) UK company reporting in respect of investment companies and (2) share-based payment arrangements.

The reviews into these two areas of corporate reporting are said by the FRC to highlight the importance of clarity and consistency in financial reporting, and that they "shed light on common pitfalls and showcase good practice."

The investment companies thematic review covers reporting by investment trusts, venture capital trusts and other closed-ended investment entities – including disclosures in relation to Level 3 fair value measurements.

The share-based payment review covers how companies apply IFRS 2 'Share-based Payment' – which is described by the FRC as "a complex standard that requires judgement and modelling to value share-based transactions".

The aim of these thematic reviews is to provide investors with confidence in UK financial reporting, by supporting high standard of corporate reporting.

To read more, please click here.

Insolvency practitioners

Insolvency rates remain stable but high based on the Insolvency Service's latest statistics 

The Insolvency Service has published its monthly insolvency statistics for September 2025 which reveal that there were 2,000 company insolvencies in September. This is similar to levels in both August 2025 (2,046) and the same month last year (1,967 in September 2024). For individuals, insolvencies in September 2025 amounted to 11,101, 3% lower than August 2025 and 7% higher than September 2024.

Although insolvency rates are steady, they remain high. The president of insolvency trade body R3 (Tom Russell) has said there is a sense of ‘stable stress’ continuing across businesses and households alike. 

This does not appear likely to change in the immediate future based on the latest Office for National Statistics business insights data, which revealed that around one in six businesses reported having no cash reserves in late September 2025 - the highest proportion since the question was introduced in June 2020. 

To read more about the latest statistics, please click here. 

Tax practitioners

HMRC issued guidance to promote good practice among tax payer intermediaries

HMRC has issued guidance to promote good practice among intermediaries, such as accountants, employers, and financial advisers, who act on behalf of taxpayers. Whilst recognising the important role intermediaries play in supporting taxpayers, HMRC is concerned about a small minority whose behaviour can harm the tax system, including misleading advertising and misuse of HMRC’s rules and systems. 

To tackle these issues, HMRC has introduced rules and guidance and will take action against intermediaries causing harm, which may include blocking access to HMRC services, reporting to professional bodies, or pursuing criminal prosecution in cases of fraud. Additionally, HMRC continuously monitors risks to identify emerging problems and adjusts its approach accordingly. 

Taxpayers are reminded that they remain responsible for their tax affairs even when using intermediaries and should be wary of unrealistic claims, unclear fees, and requests to share HMRC login details or sign blank forms. Additional guidance is available, including advice for those using umbrella companies.

To read the HMRC standard for agents, please click here; to read the HMRC's guidance regarding working through an umbrella company, please click here.

HMRC steps up enforcement on Capital Gains Tax penalties 

Recent data obtained by Financial Software Ltd (FSL) reveals a sharp rise in HMRC’s ‘Failure to Notify’ penalties relating to Capital Gains Tax. The number of penalties issued increased from 175 in both 2020/21 and 2021/22, to 254 in 2023/24, and has already reached 350 in 2024/25. This escalation coincides with significant reductions in the annual exemption amount, which fell from £12,300 to £6,000 in 2023/24 and then to £3,000 in 2024/25, which means more individuals are now liable for CGT.

Penalties are typically imposed when taxpayers miss reporting deadlines for asset disposals, changes in tax status, or registration requirements. The fines are calculated according to the potential revenue lost to HMRC, though early disclosure can mitigate the penalty. Moreover, HMRC has also intensified its efforts to tackle undeclared capital gains, particularly from property sales and investments. In the past year, HMRC has reportedly sent over 14,000 “nudge” letters to taxpayers suspected of failing to report gains, leveraging data from the Land Registry and financial institutions to identify discrepancies.

Experts at FSL have commented that the increase in fines and interest charges reflects HMRC’s renewed focus on maximising tax receipts, particularly following the Chancellor’s recent drive for fiscal tightening. With the lower exemption threshold, more taxpayers are at risk, prompting calls for greater awareness and professional advice to avoid costly mistakes.

Click here to read more.

Pensions

Pension and investment complaints to FCA rise in H1 2025

Data from the FCA has revealed an increase of 3.6% for complaints about financial services from 1.78 million in H2 2024 to 1.85 million in H1 2025. 

Whilst complaints have generally remained constant since H1 2021 (typically 1.7m – 2m biannually), three product groups experienced a notable increase in complaint numbers:

• Banking and credit cards increased 7.2% from 839,526 (2024 H2) to 899,861 (2025 H1).
• Decumulation & pensions increased 5.5% from 89,172 (2024 H2) to 94,035 (2025 H1).
• Investments increased 10.1% from 52,971 (2024 H2) to 58,303 (2025 H1).

Over the same period, home finance complaints decreased 6.3% from 83,936 to 78,641 and insurance / pure protection complaints 0.2% from 718,497 to 717,406. 

It is unclear what is driving the increases for the above product groups (whether it is simply a reflection of cost of living pressures, for example) but it is generally unsurprising that complaint levels remain high where there is increased scrutiny on FCA-regulated firms, who are expected to focus on delivering good outcomes following the introduction of the Consumer Duty in July 2023.

To access the FCA's latest complaints data please click here. 

Sterling 20: Government unites pension funds and insurers to boost nationwide investment

During a regional investment summit in Birmingham, the UK Government has announced the formation of the "Sterling 20" club.  The initiative brings together the UK's 20 largest insurers and pension funds to mobilise national savings and pension capital to support vital infrastructure projects and high-growth businesses, with the broader goal of stimulating economic development. 

Key objectives include encouraging collaboration between major investors to deliver new homes, modern infrastructure, and thriving industries such as AI. Multiple notable commitments have already been made by members. Legal & General has pledged £2 billion towards property development by 2030, including the construction of 10,000 affordable homes. NEST is said to be investing £500 million via Schroders Capital, with £100 million earmarked for UK opportunities, and £40 million is to be dedicated to expanding high-speed broadband in rural Scotland and Northern England.

The Chancellor will also engage with AustralianSuper, Australia’s largest pension fund, which is considering increasing its UK assets to £18 billion by 2030. This initiative follows the Mansion House Accord, under which leading UK pension providers agreed to invest £25 billion in domestic unlisted equities by 2030. 

Click here to read more.

Pension trustees urged to review cyber security and fraud prevention measures

Audit, tax and consulting firm, RSM UK, has urged trustees of pension schemes to review their cyber controls and fraud prevention measures and ensure they are robust. The request comes amid a doubling of ‘nationally significant’ cyber-attacks this year, which can cause significant disruption and financial loss for businesses and consumers, including pensions where the average loss is £34,000 per person. The National Cyber Security Centre published data earlier this year showing that 50% of businesses and 66% of high-income charities had experienced some form of cyber security breach or attack in the last year, with the prevalence of attacks even higher among medium sized businesses (70%) and large businesses (74%).

RSM state that these figures are a stark reminder that more needs to be done to protect pension savers from scams and fraudsters. RSM recommend that, to avoid falling victim to fraud, pension savers should use strong, unique passwords for each website, enable multi-factor authentication, to avoid logging in using public Wi-Fi, and to never click on links in emails claiming to be from their pension provider.

To read more, please click here.

Regulatory developments for FCA regulated entities

FCA publishes general insurance value measures data for 2024

On 17 October 2025, the Financial Conduct Authority (FCA) published the general insurance value measures data for January 2024 to December 2024. The data is a factual summary only, and is aimed at driving transparency in the market and to provide firms, consumer groups and other stakeholders with common indicators of value across a range of general insurance products. The FCA's key findings were that:

• Despite recent cost increases for consumers for home insurance and motor finance, the proportion of premiums paid in claims for these core products has remained broadly consistent from 2023.
• The data reflects the impact of the FCA's previous intervention on GAP insurance, where some firms agreed to pause selling until they could show their products provide fair value to customers.

The data also shows that claims costs as a proportion of premiums:

• Range from 20% for tyre cover to 69% for healthcare cash plans.
• Were 54% for motor insurance, down from 56% in 2023, and 46% for home insurance, up from 45% in 2023.
• Were over 100% for GAP insurance, due to the FCA's interventions

The FCA notes that the proportion of premiums paid out in claims is only one possible indicator of the relationship between the risk price and total price. 

To read more, please click here.

Theresa Chambers encourages firms to "do the right thing"

A speech by the FCA's Theresa Chambers (Joint Executive Director of Enforcement and Market Oversight) reiterated the FCA's central expectation that firms and individuals do "the right thing". This was in the context of Chambers discussing the change in approach to enforcement cases, with an increased focus on using its criminal and supervisory powers before opening investigations, as well as its prioritisation of cooperation, remediation, and consumer redress.

Chambers referred to the declining number of enforcement cases since 2023 and also the increasing speed at which conclusions have been reached when compared to the previous average duration over 42 months. Chambers said that this change in approach has meant the FCA can focus on the most serious cases.

Chambers said that firms should "do the right thing well before an investigation is opened" and that by doing so, FCA interventions can be avoided, whilst remediation, cooperation and consumer redress can materially impact upon enforcement outcomes.

In terms of addressing financial crime, market abuse, and crypto-related misconduct, Chambers referred to the FCA's increased use of criminal powers.

To read the Chamber's speech, please click here.

FCA opens data room to assist with motor finance consultation responses 

As a part of its ongoing consultation on the compensation scheme for motor finance customers, the FCA has introduced a controlled-access data room, which contains underlying data relevant to the FCA’s analysis of loss within the context of the consultation. The data room is designed to enable stakeholders with expertise in handling large datasets and financial modelling to examine the FCA’s methodology and respond more effectively to the consultation. 

Access to the data room is not open to all.  Stakeholders must formally request entry by emailing the FCA (motordataroom@fca.org.uk). The request must specify which individuals are seeking access, their reasons for doing so, and provide evidence of their credentials in working securely and confidentially with substantial volumes of data and financial modelling. Before gaining access, individuals are required to sign a confidentiality agreement to ensure the data is handled appropriately.

However, the FCA has clarified that firms must use their own internal data when calculating redress liabilities. The data room is intended solely to aid understanding of the FCA’s analysis and should not be used for firms’ own redress assessments. Firms are therefore obliged to ensure that their calculations are based on their own records and data, in line with FCA requirements.

Click here to read more.

Consumer duty next steps set out by FCA, as firms told they must evidence outcomes.

During the recent Consumer Duty conference, Charlotte Clark of the FCA stated that in the next steps of the Consumer Duty, firms must demonstrate that their communications move vulnerable customers into better value products.

Clark said that these next steps will be a "deliberate move" from "prescription to principles with proof", which will necessitate more evidence of better outcomes, with fewer rigid templates.

Clark stated that the benefits of the consumer duty were clear to see through increasing rates and improving prompts, but that it is now the time for firms to "prove these communications actually move vulnerable and long tenured cohorts into better value products."

In clarifying how firms can understand the FCA's expectations, Clark said: "Are firms delivering fair value, clear understanding and timely support? If the answer is yes then innovation and growth can thrive. If not then complexity and harm creep back in."

Clark also relayed the message that the cultural shift the FCA is looking for is beyond simply whether a firm is compliant.

Clark's message was simplification, which can help with achieving these objectives. The "simplification plan" relates to four aspects – (1) future proofing disclosing to ensure fewer rigid templates and more clear outcome oriented communications, (2) reducing duplication, removing legacy material where the duty already sets a high bar, (3) targeted clean ups to align mortgage, insurance and credit advertising expectation with the consumer duty and (4) cultivating support for small firms through guidance and pilots.

Clark's closing remarks detailed the FCA's priorities as it moves towards the next stage of the Consumer Duty – identifying simplification, proportionality and outcomes monitoring. Clark stated that "these are not abstract goals, they are practical steps to make financial services fairer, clearer, and more responsive to everyday lives."

To read more, please click here.

Emerging risks

FCA urges banks to protect victims of romance fraud 

The FCA has found that romance fraud is a growing crime, with cases rising 9% last year, where victims are tricked into sending money to fraudsters posing as romantic interests, often via social media or dating sites. The FCA’s review highlights that over 85% of cases start online, underscoring the role of platforms in preventing fraud. Victims often don’t disclose the true reason for payments, making intervention difficult. 

Many firms miss chances to spot suspicious transactions due to inconsistent staff training and ineffective monitoring systems. However, some banks go beyond expectations, providing a high level of support and tailored engagement to victims, albeit this wasn't consistent across all firms. The FCA urges firms to improve detection and care, whilst warning the public to watch for red flags such as requests for money, reluctance to meet in person, or suspicious behaviour. Victims are encouraged to report fraud to Action Fraud or the police and consult their banks, which may offer refunds of up to £85,000 to help prevent further losses.

To read the FCA's romance fraud review, please click here. 

With thanks to this week's contributors: Daniel Parkin, Dorian Nunzek, Damien O'Malley, Ben Simmonds, Haiying Li, James Parsons, and Lauren Butler