Money Covered: The Week That Was – 31 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

Mazur decision applied to cut costs 

District Judge Richard Lumb recently applied the High Court decision in Mazur v Charles Russell Speechlys LLP [2025] to limit the costs awarded to a firm in a housing dispute from £3,000 to less than £500. 

The conduct of litigation is a reserved legal activity under the Legal Services Act 2007, meaning that only those authorised (such as SRA-regulated solicitors) or exempt (such as litigants-in-person) can carry out it out. Mazur has confirmed that non-authorised employees of law firms cannot conduct litigation under supervision but can support a solicitor or other authorised person in conducting litigation.

DJ Lumb found that the person in question was not authorised to be conducting litigation and disallowed the costs as a result, applying Mazur. DJ Lumb warned that “judges at my level are going to make decisions and I’m afraid you’re going to end up with a whole lot of decisions which are inconsistent with each other”.

It remains unclear whether Mazur will be appealed, but this development shows the potential claims that may follow in respect of the past conduct of litigation. Mazur is also not limited to where non-authorised employees carry out litigation. In addition to costs disputes between parties such as that considered by DJ Lumb (or fee disputes between client and firm), there could be professional negligence claims if unsuccessful parties decide to pursue their former representatives on the basis the litigation was handled by a non-qualified employee (if they consider the matter was mishandled as a result). 

To read more about this decision, please click here. 

FOS developments

FOS' Quarterly Complaints Report: Q2 2025/26 – a notable decrease in complaints

The FOS has recently released its Q2 2025/26 report – analysing complaint data from July to September 2025.  The key highlight is that the FOS only received 46,300 complaints. This may seem like plenty, however, it represents a 37% decrease compared to the 73,700 complaints received in Q2 2024, and a sharp decline from the 68,000 complaints received in Q1 2025 (from April to June). 

The number of complaints submitted by professional representatives also fell. In Q2 2025, professional representatives accounted for only 4,300 cases, compared to 37,100 cases in Q2 2024. This is largely attributable to the FOS' introduction of its new charging model, which led many representatives to withdraw or abandon cases - particularly those with historically low uphold rates. 

The overall complaint uphold rate stood at 33%, and the products subject to the most complaints were:

1. Current accounts – 7,900 complaints
2. Motor Hire purchase – 4,900 complaints
3. Credit cards – 4,700 complaints
4. Car/motorcycle insurance – 3,200 complaints
5. Electronic money – 2,200 complaints

There was a notable drop in Motor Hire Purchase complaints, declining from 24,300 in Q1 2025 to only 4,300 in Q2 2025. This decrease is likely attributable to the Supreme Court's decision on vehicle finance commissions handed down at the start of April 2025 (you can read our article on this judgment here) and subsequent announcement of a s.404 redress scheme. 

To read the FOS' full report for further analytics, please click here.

Regulatory developments for FCA regulated entities

Complaints rise across UK financial services in early 2025

In the first half of 2025, financial services firms received 1.85 million complaints, an increase of around 3.6% since late 2024. The biggest increases came from:

• Investments (+10.1%)
• Banking & credit cards (+7.2%)
• Decumulation & pensions (+5.5%)

Meanwhile, home finance and insurance and pure protection saw decreases of approximately 6.3% and 0.2%, respectively.

Overall, around 57% of complaints were upheld, with a total of £283 million paid in redress; representing a 20% rise on the 2024 H2 figure of £236 million.

To read the FCA's overview on this, please click here.

ESG ratings providers to fall under FCA regulation

Legislation has been finalised to bring Environmental, Social and Governance (ESG) ratings providers under FCA regulation.

The legislation has been introduced following an initial government consultation in 2023, which was prompted by a call from the International Organization of Securities Commissions in relation to transparency in data and ESG ratings.

The legislation will require ESG ratings providers to hold FCA authorisation, and the law will apply to ESG ratings providers operating both inside and outside of the UK. There will be four key areas for focus: transparency, governance, systems and controls, and conflicts of interest.

The FCA has said that the legislation was broadly supported throughout the industry and that it "marks a significant milestone in the UK's commitment to enhancing transparency and trust in this market."

The FCA has been working on developing this new regulatory regime and it plans to introduce the proposed rules by the end of 2025. Guidance is also expected from the FCA to help firms establish whether they will require authorisation for the activities they undertake.

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

FCA makes first ever data protection prosecution

The Financial Conduct Authority (FCA) has made its first prosecution under the Data Protection Act. Luke Coleman pleaded guilty to unlawfully obtaining and the subsequent disclosure of personal data in breach of the Data Protection Act. Coleman accessed customer details from Virgin Media O2’s systems, where he was employed. The data obtained by Coleman was sold to Nicholas Harper, a friend of Coleman's, who then exploited the data in a crypto fraud that defrauded at least 65 investors. Coleman was fined £384, ordered to pay a £38 surcharge, and contribute £500 in prosecution costs, the maximum penalty available for this type of offence.

While the fine is not significant in size, the case is important as it marks the first prosecution by the FCA under the Data Protection Act. Enforcement of data protection laws is usually the responsibility of the Information Commissioner’s Office, however this case demonstrates that the FCA is also prepared to prosecute individuals in order to tackle misuse of personal data that facilitates financial crime.

To read more on FCA's prosecution, please click here.

FCA warns investors in CFDs risk losing out on protections

The FCA has urged individuals who invest in Contracts for Difference (CFDs – investments that involve betting on the price of an asset without owning it) not to give up vital retail consumer protections. 

The regulator is referring to leverage limits and client loss protections that prevent nearly 400,000 people a year from risking more than their original stake in CFDs and provide between £267m and £451m worth of protection. The warning has been prompted by concern that firms are using high-pressure techniques to encourage investors to claim they are professional clients in order to push these investments and encourage them to invest more than they can afford to lose. 

To read the FCA's press release on this, please click here. 

Emerging risks

UK losses to fraud rise to £629.3 million in the first six months of 2025

On 24 October 2025, UK Finance published its half year fraud report for the first half of 2025. Criminals stole a total of £629.3 million in the first six months of 2025, with 2.09 million confirmed cases across both authorised and unauthorised fraud. This represents a 3% increase in losses and a 17% increase in cases relative to the first half of 2024.

The rise in losses was primarily due to larger sums being lost through authorised payment fraud (APP), which witnessed a 12% surge to £257.5 million. Investment scams have risen by 55% to £97.7 million, now representing 38% of total APP losses. The average loss for an investment scam is over 20 times greater than for a purchase scam. 

AI has been identified as the main driver for enabling fraud as it allows criminals to execute more sophisticated, high-volume scams using deepfakes and synthetic identities.

To read the UK Finance's half year fraud, please click here.

Relevant case law updates

Linear Investments Ltd v Financial Ombudsman Services Ltd [2025] EWCA Civ 1369

On 29 October 2025 the Court of Appeal dismissed Linear Investment Ltd's appeal regarding an Ombudsman's adverse finding. Back in April 2022, the Ombudsman upheld a complaint against Linear, finding that a client had been mis-sold the "Pembroke strategy". The client was ordered to be compensated by reference to how their investment performed against the benchmark of the FTSE UK Private Investors Income Total Return Index.

The appeal was dismissed on two grounds concerning liability and the use of a FTSE index benchmark for the calculation of the award. However, the court allowed the appeal on the third ground concerning contributory negligence regarding the client's misrepresentation of his own trading experience. Given this misrepresentation, the case has now returned to the Ombudsman to determine and an appropriate reduction for contributory negligence.

To read the judgment, 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