Money Covered: The Week That Was – 29 August 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

The SRA raises concerns over the high-volume claims market

The SRA has released a statement setting out its concerns regarding the high-volume consumer claims market and the subsequent risk of consumer harm.

High-volume consumer claims are categorised as large numbers of consumers making claims for compensation or redress linked to a specific event/systemic issue, such as the mis-selling of PPI or car finance.

The SRA's main concern is that some CMCs may not be acting in the best interests of their clients or following the relevant rules/regulations which could lead to consumer harm. A key example is SSB Law Ltd (now collapsed) which issued and then discontinued cavity wall insulation claims which resulted in their clients being pursued for adverse legal costs not covered by after the event (ATE) insurance.

To tackle this issue, the SRA is delivering a "targeted and robust" programme of work which includes identifying and understanding issues and themes across the sector, sharing best practice advice, working with key regulators such as the FCA (which regulates CMCs) and investigating wrongdoing and taking enforcement action. As part of this, a thematic review has been published which identifies good and poor practices and law firms are required to complete a mandatory declaration confirming that they are compliant with the SRA's rules and obligations.

Concerns regarding the high-volume claims market have been present for some time and many would argue that the SRA has been too slow to react. Time will tell whether the SRA's programme of work is enough to counter the harm to consumers and whether greater investigatory and enforcement action is needed instead. But if the SRA do act, this could be a positive development for the FCA regulated market in particular given that mis-selling issues often focus on this area – reigning in the CMC/no win no fee sector may limit the number of complaints/claims FCA regulated firms see where some are often no more than a fishing exercise that needs to be dealt with in accordance with their DISP obligations.

The statement can be read here.

Insolvency practitioners

The Insolvency Service publishes interim guidance following the Supreme Court judgment of motor finance

The Insolvency Service has published guidance for people who are still bankrupt, or have recently been discharged from bankruptcy, who may have a right of action relating to any mis-sold motor finance. Following the Supreme Court judgment earlier in the month, commission arrangements could still be deemed unfair, and therefore compensation (being the return of the commission plus interest) may be payable.

The guidance serves as a reminder to former bankrupts that any right of action to a mis-sold motor finance claim, depending on when the finance agreement was taken out, may still form a part of the bankruptcy proceedings and therefore vest with the Official Receiver. If the finance agreement was taken out before the date of the bankruptcy, or the date of the discharge from bankruptcy, individuals must first contact the Official Receiver before making any claim or instructing a Claims Management Company. It is also an indicator that trustees in bankruptcy should be considering the recovery of commission as part of their analysis of the assets within a bankrupt's estate.

To read more, please click here.

Tax practitioners

R (on the application of Fluid System Technologies (Scotland) Ltd) v HMRC [2025] UKUT 278 (TCC)

Following a judicial review challenge brought by 3 companies in respect of HMRC's refusal to make repayments under the Disguised Remuneration Repayment Scheme 2020 (DRRS), the Upper Tribunal has dismissed the challenge.

DRRS is for those who used disguised remuneration schemes between 1999 and 2016 from which disguised remuneration loans were made, and where the outstanding tax due was settled with HMRC. DRRS allows people to apply for a refund of income tax and national insurance contributions paid, or a waiver of payments being made, in settlement of having used a disguised remuneration scheme.

In the above case, the claimants operated disguised remuneration loan agreements and entered into settlement agreements with HMRC (such that the loan charge would not apply).

The claimants challenged HMRC's interpretation and application of the eligibility conditions for repayment and whether HMRC had no power to recover and whether reasonable disclosure had been made within tax returns.

The court held that HMRC was correct to refuse repayment in the review decisions under challenge and that they had the power to recover the relevant amounts via uplift mechanisms or deeming provisions.

To read the case summary please click here.

Pensions

Regulators call for action on guided retirement advice

The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) have urged the pensions industry to take proactive steps to deliver guided retirement solutions. In particular, the industry has been asked to consider innovative solutions to combat the current complex pensions environment - where consumers are having to make difficult decisions without tailored advice upon retirement.

The announcement was published in a joint podcast by the regulators and hopes to assist consumers in making better-informed decisions upon retirement. The podcast also discusses the FCA's 'Targeted Support' proposals and have urged trustees to respond to the ongoing consultation to support consumers' pensions and investment decisions given that they will complement trustee obligations to provide guided retirement solutions (which will be an obligation on trustees following the Pensions Bill).

To read more, click here.

Regulatory developments for FCA regulated entities

FCA review of algorithmic trading draws positive conclusions

The FCA published its high-level conclusions last week, following its review of the algorithmic trading market based on ten sample firms.

Overall, the conclusions were positive, with the FCA finding that firms had a good understanding of their obligations in respect of controls on algorithmic trading under Regulatory Technical Standard 6 of the EU Markets in Financial Instruments regime. It also found improvements in self-assessment processes and documentation thereof since its last review in 2018.

Of course, there was some variety in standards, with the FCA finding that in some cases, the technical knowledge of compliance staff was insufficient. The FCA has provided individual feedback to all firms involved.

You can read more here.

FCA confirms changes to rules in response to upheld complaint

On 21 August 2025, the Financial Regulators Complaints Commissioner (FRCC) published a decision (originally issued 11 July 2025) upholding a complaint about the FCA for failings concerning an unnamed payment services firm. The decision described serious failings on the part of the FCA.

In response, the FCA has confirmed that it is committed to making improvements and pointed to their policy statement on changes to payment services rules published earlier this month as evidence of this. The changes are aimed at improving safeguarding practices in payment firms as well as making it easier for the FCA to intervene in payment firms which do not meet the FCA's safeguarding expectations.

The FCA also confirmed that, in response to the decision, they had already made several changes aimed at improving supervision of the payments services sector, including "strengthening internal processes and our risk tolerance framework, providing additional training to staff on specialist subject matter and continuing to develop internal resources and tools."

The FRCC stated that it was pleased with the FCA's response to the decision and thanked them for "their proactive approach to improvements in this case."

To read the decision, the FRCC's comments, and the FCA's response, click here.