Money Covered: The Week That Was – 3 July 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

The scope and proportionality of the Consumer Duty under FCA consultation

On 26 June 2026, the FCA issued a consultation paper noting that it had seen the Consumer Duty being applied more widely and more extensively than intended. The FCA has said that this is particularly the case with the wholesale markets and complex distribution chains, where the majority of activity does not impact materially on retail outcomes.

The FCA is consulting on changes to the rules and non-Handbook guidance (FG22/5), which include:

• Removing businesses with non-UK customers from the Duty's scope, reducing unnecessary friction for the internationally active firms and supporting the UK's role as a leading global exporter of financial services.
• Making it clearer where the Duty applies and where it doesn't, including through worked examples.
• Clarifying when and how firms can rely on each other when they work together in distribution chains, and how they can apply the Duty more proportionately.
• Explaining the interaction between the Duty and other product governance rules.

The consultation will close on 28 September 2026 and the FCA anticipates that it will publish the final rules and policy statement in the first quarter of 2027.

To read the consultation, please click here.

Tax practitioners

HMRC consults on new direct tax offence for reckless untrue statements 

HMRC’s consultation, published 23 June 2026, proposes a new criminal offence for making reckless untrue statements or declarations in direct tax, addressing the current position where direct tax prosecutions generally rely on dishonesty-based offences (unlike indirect tax, where a recklessness offence already exists).

A “statement” would include oral, written and implied statements by conduct, and a “declaration” would be a formal assertion of fact in a prescribed form affirmed as true. “Recklessness” would mean making an untrue statement/declaration while aware of a risk it may be wrong, with guidance intended to distinguish this from inadvertent errors.

The offence would also apply to agents acting in direct tax matters. The proposed maximum penalty is an unlimited fine and/or up to two years’ imprisonment. Innocent mistakes, misunderstandings and errors amounting to failure to take reasonable care are intended to remain within existing civil penalty regimes, and existing criminal offences would continue to apply where a person knowingly makes an untrue statement. The consultation closes at 23:59 on 16 August 2026.

To read more, please click here.

HMRC opens consultations on (1) Timely Payments in Income Tax Self Assessment (ITSA) and (2) mandatory payment of VAT and PAYE by Direct Debit 

HMRC has published two consultations aimed at modernising tax payment mechanisms. 

The first consultation concerns the implementation of more timely payments for income tax self-assessment (ITSA). Views are sought on:

• The design of payments by ITSA taxpayers with sufficient PAYE income. This follows the Autumn Budget announcement that such taxpayers will be required to pay their forecast ITSA liability through PAYE from 6 April 2029. HMRC's current proposal is for the forecast liability to be based on the taxpayer's last filed ITSA return but that taxpayers can update the forecast using more recent information. HMRC is seeking views on whether the current cap of tax that can be collected through PAYE (50% of PAYE income) should be raised for specific taxpayer groups, support and guidance taxpayers and businesses may require, and alternative payment arrangements for taxpayers with varying income.
• HMRC's proposes to introduce more timely payment for other ITSA taxpayers through more frequent (monthly or quarterly) direct payments on account from 6 April 2029. Payments on account would be forecast on past self-assessment returns (subject to updating by taxpayers), and a balancing payment or repayment would be due following the ITSA return submission.

The government is also considering whether ITSA taxpayers with PAYE income can choose between the two methods and whether the current threshold of £1,000 of tax owed before payments on account are required remains appropriate. 
  
The second consultation also follows the Autumn Budget and seeks views on the introduction of mandatory Direct Debit payments for PAYE and VAT. The government asks about the impact on businesses and the proposed incentives to encourage compliance if paying VAT and PAYE by Direct Debit becomes mandatory, specifically:

• a penalty where a payment is not made by Direct Debit (and the payer is not excepted). A penalty could apply even if the payment is otherwise made in full and on time.
• a timing incentive, for example by restricting existing payment deadline extensions so that they apply only to payments made by Direct Debit.

Regulatory developments for FCA regulated entities

FCA unveil proposals to prevent disproportionate influence over investment trusts

The FCA has published proposals to amend the UK Listing Rules for closed-ended investment funds (investment trusts), aimed at limiting situations where minority or activist shareholders can exert disproportionate influence over boards - particularly where conflicts of interest may arise. The FCA notes the potential for conflicts where a significant shareholder seeks board representation and (either directly or indirectly) to become or influence the appointment of the investment manager.

Key proposals include:

• Board independence: Broadening the current independence focus (largely in respect of the relationships with the current manager) to include potential conflicts between directors and shareholders who proposed their appointment.
• Voting restrictions for conflicted directors: Directors would be considered conflicted if they were put forward by a proposed investment manager and would be excluded from voting on matters related to the shareholder who recommended them, or potentially, on any investment changes whatsoever.
• Potential limits on shareholder voting: The FCA is considering whether a shareholder connected to a closed-ended fund should be restricted from voting on investment policy changes. This is being explored as a way to mitigate conflicts of interest where an investment manager is also a substantial shareholder, or vice versa. The FCA is also exploring less restrictive alternatives, including capping voting rights irrespective of the shareholding. 

The FCA has emphasised it intends reforms to be as limited as possible so as not to undermine legitimate shareholder activism and board accountability. However, the focus will be on the reduction of harm, particularly for smaller investors.

The review is ongoing and open for feedback until 14 August, with the FCA aiming to complete the consultation by the end of the year.

To read more, please click here.

FCA opens consultation on simplification of insurance rules

The FCA published a consultation paper on 29 June 2026 setting out proposals for simplifying insurance rules.  The consultation is part of the FCA's wider efforts to reduce complexity for firms and streamline rules to increase flexibility, predictability, and efficiency.  

The proposals include narrowing the scope of application of the rules for non-UK business, removing disclosure requirements which do not assist customers in making choices, providing for greater flexibility in the way firms provide disclosures, and clarifying the distinction between sales involving personal recommendations and those that do not.

The consultation remains open until 4 September 2026.

To read the consultation paper, click here. 

FCA launches consultation on simplification of consumer investment disclosures 

The FCA published a consultation paper on 2 July 026 setting out proposals for simplifying consumer investment disclosure requirements.  The proposals are aimed at making it as easy as possible for consumers to assess the value of products and services and understand the costs and fees associated with investment choices.  

Proposed changes include:

• Further aligning FCA handbook rules with the FCA's new Consumer Composite Investments (CCI) regime to make costs disclosures more consistent.
• Removing the Markets in Financial Instruments Directive (MiFID) derived cumulative effect illustration and focussing instead on showing how costs have impacted returns in regular post-sale reporting.
• Requiring that firms do not both charge fees and retain interest on cash holdings.
• Ensuring firms provide a clear explanation of interest earned on cash holdings and how the interest rate is calculated.

To read the consultation paper, click here.

FCA puts firms on notice over value in older unit-linked products 

The FCA has published a multi-firm review of Consumer Duty price and value practices in the unit-linked pensions and savings market.

The regulator said many unit-linked products continue to provide fair value. However, its review found that customers in some legacy products were receiving poorer value than customers in newer arrangements. The FCA linked this to older product design, layered charging structures and weaknesses in firms’ data.

The key points from the review are:

• Some legacy products may provide poorer value than newer arrangements.
• Firms should actively identify poor value in legacy books and take action where needed.
• Fair value assessments need to be properly evidenced, including through better data.
• Firms should consider good practice such as simplifying legacy products, modernising systems, reducing or capping charges and moving customers into better-value alternatives where appropriate.
• The FCA may take supervisory or regulatory action where firms cannot show timely progress or evidence of fair value.

The review focused on unit-linked non-workplace pension and savings contracts. The FCA said this part of the market accounts for around 17m policies and £500bn in assets, while unit-linked funds more broadly hold over £1tn of customer investments.

The FCA’s message is that firms should not treat legacy books as static. It expects providers to identify where older products may not be delivering fair value, evidence their assessments properly and take action where needed under the Consumer Duty.

The regulator acknowledged that firms may face legal, regulatory, tax and operational barriers when improving outcomes in closed books. It also noted that the Pension Schemes Act 2026 contains contractual override provisions for workplace pensions and said it will continue to engage with relevant stakeholders on whether similar flexibility should be considered for non-workplace pensions.

The FCA expects firms to reflect on the review and apply the good practice identified. Where firms cannot show timely progress or evidence of fair value, the regulator said it will take appropriate supervisory or regulatory action.

To read more, please click here.

Emerging risks

FCA issues five policy statements confirming cryptoasset rules

On 30 June 2026, as part of the FCA's new cryptoasset regime which will come into force on 25 October 2027, the FCA has issued five policy statements:

• The final rules for the admissions and disclosures, and market abuse regime (PS26/9) – intended to promote market integrity, improve transparency and strengthen consumer protection, while reflecting the particular structure and risks of cryptoasset markets.
• The final rules for stablecoin issuance (PS26/10) – covering non-systemic UK-issued qualifying stablecoins, issuance, backing assets, redemption, safeguarding and disclosures. This has been supplemented by a joint statement from the Bank of England and the FCA, confirming how they and other authorities will regulate stablecoin issuance.
• Regulated cryptoasset activities covering the final rules for guidance for the regulated cryptoasset activities defined by the Regulated Activities Order, including operating a qualifying cryptoasset trading platform, dealing, arranging, lending and borrowing, staking, safeguarding and the FCA's current approach to decentralised finance (PS26/11).
• A prudential regime for cryptoasset firms covering capital, liquidity, risk management and public disclosure requirements (PS26/12).
• Application of FCA handbook for regulated cryptoasset activities which sets out the FCA's final rules and guidance on how key cross-cutting FCA Handbook obligations will apply to regulated cryptoasset activities. These include standards on conduct, governance, resilience, redress, and reporting (PS26/13).

The FCA has published a summary of the policy statements and it is also hosting a webinar on 17 July 2026. The FCA has urged firms to familiarise themselves with the changes and consider whether any additional authorisations or variations of permissions will be required.

The FCA has confirmed that it will consult on managing cryptoasset firm failures later on in 2026, and to also provide further clarity around financial crime.

Links to all FCA policy statements and the summary can be found above.

With thanks to this week's contributors: James Parsons, Heather Buttifant, Brendan Marrinan, Ben Simmonds, Alison Thomas and Kerone Thomas

If you have any queries please do get in contact with a member of the team, or your usual RPC contact.