Money Covered: The Week That Was – 26 September 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

Super-complaint launched against the insurance industry

Which?, the action group focused on consumer rights, have launched a 'super-complaint' against the entire insurance industry (although the focus is on home and travel insurance) for serious failings in fairly dealing with policy inception and claims handling. 

The complaint, which is being brought on behalf of a large number of consumers that are either being significantly harmed or are at risk of harm, highlights cases of refused payouts for technical infringements or in some cases, against third party specialist advice. 

The complaint also accuses the FCA of failing to provide sufficient protection for consumers, despite the FCA's commitment to raise industry standards. 

To read more, please click here. 

Insolvency practitioners

Updated Code of Ethics for insolvency practitioners

The Joint Insolvency Committee have approved an updated Code of Ethics issued by the Institute of Chartered Accountants for England and Wales (ICAEW), the Institute of Chartered Accounts of Scotland (ICAS), and the Insolvency Practitioners Association. 

The update aligns the requirements on insolvency practitioners with the amended 2024 Code, which has been in effect since 1 July 2025.  

The revisions, which take effect from 1 October 2025, touch on four key areas:

• Professional behaviour – being behaviour that a reasonable and informed third party would expect of an insolvency practitioner. This focuses on treating others fairly and with respect and dignity.
• Role and mindset – to have an enquiring and open mind that always acts with integrity in an objective, professional and competent manner.
• Technology – using technology in an appropriate way with sufficient risk assessments; and
• Amendments arising from the withdrawal of prescribed accountancy bodies in the Republic of Ireland. 

To find out more, please read here.

Tax practitioners

Inheritance tax changes and the need for more planning 

In the 2024 Autumn Budget, Rachel Reeves announced changes that will now include previously excluded pensions in a deceased's estate for inheritance tax (IHT) rules from 2027. 

However, despite the incoming IHT rules changes, pensions remain one of the most tax-efficient ways to save for retirement and pass on wealth. 

If an individual dies before the age of 75, their beneficiaries can usually inherit their pension pot tax-free. However, if an individual dies after the age of 75, the beneficiaries will pay income tax at their own marginal rate on any monies withdrawn, but the remaining pot avoids IHT. 

As the IHT rules change will pull unused pension funds and some death benefits into the estate for IHT purposes, it is becoming more important to re-consider and advise on, the use of other tax-efficient arrangements, such as ISAs, junior ISAs, gifts and trusts. 

To read more, please click here.  

Stakeholder collaboration on reform

On 16 September 2025 HMRC held their London Stakeholder conference. The conference saw HMRC and Government officials give speeches and panels on HMRC's top priorities. 

Daniel Tomlinson MP spoke at the conference to give a keynote speech. In his speech he set out HMRC's three priorities which have been set by the UK Government, these being:

1. To improve services to taxpayers through the use of digital services
2. To close the tax gap
3. To reform and modernise the tax system

It was also announced that 5,500 compliance caseworkers have been recruited to assist with actioning the above priorities. 

HMRC aims to collaborate with its stakeholders to facilitate discussions and transparency in the upcoming reforms. 

To read more please click here.

Pensions

FCA clarifies cancellation rights for tax free pension lump sums

On 25 September 2025, the FCA published a statement clarifying how its rules on cancellation rights apply when consumers access tax free pension lump sums, or Pension Commencement Lump Sums (PCLS). The statement follows HMRC’s Newsletter 173, which set out the tax treatment of PCLS where funds are later returned to a pension.

The FCA confirms that taking a PCLS on its own does not give rise to a cancellation right under COBS 15.2. Cancellation rights only arise in connection with specific contracts – for example, joining a pension scheme or transferring an existing one. A standalone PCLS event will not, in itself, trigger those protections.

Firms that structure PCLS within wider contractual arrangements, such as new scheme entries, transfers or drawdown contract, should exercise caution. Where a PCLS is delivered as part of a cancellable contract, firms may be required to offer broader cancellation rights unless those rights are clearly limited to the specific regulated activity.

The FCA notes that firms will adopt different approaches. Some firms allow consumers to take a PCLS without varying the underlying contract, whilst others include it in a new or amended arrangement. The FCA expects firms to consider the interaction between their contract design and both regulatory and tax requirements.

Where a consumer takes a PCLS and later seeks to return the funds to their pension, HMRC’s tax rules will determine what is permitted and whether any tax charge arises.

To read more, please click here.

FOS developments

Two FOS consultations due to close on 8 October 2025

On 8 October 2025, two open consultations concerning FOS processes and redress will be closing for comments.  Interested firms should ensure that they provide their responses before this date.

The first consultation was published by HM Treasury and proposes various changes to FOS processes, including the welcome introduction of a 10-year longstop time limit for FOS complaints from the date of the event complained about as well as changes to procedures around mass redress events (such as the British Steel Pension Scheme and vehicle finance).  

The second consultation, which is expressly stated to be read alongside the first, concerns modernising redress processes and has been jointly published by both FOS and the FCA.  The second consultation, among other things, includes proposed changes to clarify the FCA's expectation on firms taking proactive redress action, identifying mass redress events, a mechanism for FOS to refer issues to the FCA to improve consistency on regulatory implementation, and changes to the FCA handbook aimed at improving the efficiency of both FOS and the FSCS.

To read or respond to the first consultation click here.  To read or respond to the second consultation click here.

Regulatory developments for FCA regulated entities 

Non-Financial Misconduct 

The Financial Conduct Authority (FCA)'s policy statement clarifying their rules on bullying, harassment and violence in the workplace which come into force on 1 September 2026. 

The rules, which apply to the majority of regulated firms, places greater emphasis on firms to have sufficient policies and procedures to 1) treat non-financial misconduct as misconduct, 2) take disciplinary action 3) provide sufficient training for staff and 4) to promote a 'speak up' environment.

To comply with their regulatory obligations, firms are encouraged to have sufficient: 

• Policies and procedures
• Reporting channels to promote the 'speak up culture'
• Investigation procedures which document decisions
• Disciplinary action procedures. 

Failure to have or implement any of the above can lead to regulatory scrutiny, which of course can have a negative reputational impact on firms. 

Finalised guidance is expected at the end of the year. To read more, with a comparative analysis of the US' position, please click here.

Emerging risks

Covid repayment scheme – tougher sanctions ahead

The UK Government has launched a COVID repayment window as part of a drive to recoup COVID frauds of around £10bn.

This window will allow businesses to repay financial support taken through the COVID pandemic. The repayment window was announced on 12 September and will be open until December 2025.

Businesses and individuals who received financial support in COVID can repay funds with no questions asked, however, once the window closes tougher sanctions will be imposed.

This window provides a proactive opportunity to avoid possible civil and criminal investigations, including possible director disqualifications and/or enforcement proceedings. 

To read more please click here.

Relevant case law updates

High Court take narrower view on solvent winding ups

An option for business owners looking to exit their business is a Members Voluntary Liquidation (MVL), a solvent form of winding up. This option is only available to companies that have sufficient assets to cover liabilities within 12 months of the directors making a statutory declaration. In a recent decision of Noal SCSP v Novalpina Capital, the High Court ruled that this solvency test is not one of 'balance sheet solvency' but is actually a practical question of whether payment is actually going to be made. If payment will not be made, the winding up should not be an MVL, but should be an insolvent winding up. 

Alison Broad, the Head of Insolvency Monitoring at the ICAEW states “This decision contradicts the long-standing approach taken by much of the insolvency profession to MVLs,”. Advisors should therefore explain the difference between and carefully consider the timings of both intended payments and the statutory declarations made ahead of any winding up. 

This Judgment is in the process of being appealed. 

To read more, please click here.