Money Covered: The Week That Was - 4 July 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 – is now available.  In the latest episode the team discusses the intersection between Employment Practices Liability and Directors & Officers insurance is now available.

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

Headline Developments

FOS receives over 305,000 complaints in 2024/2025

FOS has reported that complaints figures have reached their highest level since the PPI complaint influx in 2018/2019. The data revealed a 54% increase in the total number of complaints received, up from 198,798 to 305,726. Despite this increase, the overall uphold rate slightly decreased, from 37% to 34%.

Whilst the data indicates general trends upwards in complaints about most types of regulated products, the increase was largely driven by increases in hire purchase complaints, which more than tripled year-on-year. The number of credit card complaints also more than doubled year-on-year, with the bulk of the increase driven by claims management company-initiated complaints relating to unaffordable lending practices.

The influx of complaints adds substantial pressure to FOS and affects the speed at which FOS can deal with complaints. Whilst FOS is recruiting additional case workers and transforming digital services, it is also working with HM Treasury and the FCA to modernise the dispute resolution system to ensure that it can provide a high-quality alternative to the courts.

This report coincides with FOS' recent decision to introduce charging for professional representatives who bring more than 10 complaints per year. This measure is intended to discourage claims management companies from wasting FOS' finite resources on dealing with poorly articulated complaints. It will be interesting to see whether this change has a bearing on complaint levels going forward.

To read the article, please click here.

To access the data and FOS commentary, please click here.

FCA launches biggest financial advice shake-up – bridging the advice gap to help individuals get better returns

The FCA has announced a major overhaul of financial advice rules, aiming to close the long-standing “advice gap” and help millions of savers get better returns. Under the new framework, firms will be able to offer “targeted support” - generic investment suggestions to groups of consumers - without being subject to the full regulatory burden of personalised advice.

This change is intended to assist British savers with large cash savings and little or no investment, including an estimated 7 million adults with over £10,000 in cash. A second category, “simplified advice,” will allow firms to offer product suggestions based on a basic review of key facts, without needing full suitability checks. The FCA aims to authorise targeted support services by April 2026. Industry leaders welcomed the move as a potential catalyst for building a stronger retail investment culture, though consumer advocates stressed the need for safeguards against misuse.

To read the full consultation paper, please click here.

To read more, please click here.

 Accountants

ICAEW update Code of Ethics

The Institute of Chartered Accountants in England & Wales (ICAEW) has published its new code of ethics, effective from 1 July 2025. 

The new code which binds all members, students, affiliates and employees of member firms, adopts a principles-based approach, based on five fundamental principles: (a) acting in the public interest; (b) promoting an ethical culture; (3) acting with integrity; (4) preserving confidentiality; and (5) adopting professional behaviour.

There is also a Conceptual Framework which must be applied. It has been created to help accountants identify threats to compliance, evaluate the threats identified, address those threats and meet their responsibility to act in the public interest.

The Code of Ethics and further guidance can be read here.  

Auditors 

Audit Watchdog Sets new guidance for 'block box' AI

The Financial Reporting Council (FRC) has issued its first guidance on the application of artificial intelligence (AI) in audit, alongside a thematic review of the six largest firms' processes to certify new technology used in audits. The guidance aims to facilitate a structured approach for integrating AI tools within audit processes and to clarify documentation requirements. It will also set out the regulatory expectations for third party technology providers serving the audit industry.

The FRC has noted that AI tools are quickly advancing and when used responsibly they have significant potential to enhance audit quality, support market confidence and drive innovation. The FRC aims to support and encourage innovation in auditing and the published guidance aims to illustrate how AI can enhance audit work whilst clarifying FRC expectations around responsible use of AI.

The guidance can be read here. 

Regulatory developments for FCA regulated entities

FCA sets out findings of multi-firm review 

The FCA recently carried out a review which found that risk management frameworks (which reflect the activities a firm undertakes and potential harm it could generate) and wind-down plans (WDPs) in firms remain underdeveloped. Notably, none of the firms reviewed met the FCA's expectations.

The regulator has identified three main areas of improvement for firms’ risk management frameworks: (1) enterprise-wide risk management frameworks; (2) liquidity risk management; and (3) consideration of group risk.

The FCA is encouraging firms to look at their own arrangements and consider whether they meet the FCA's existing expectations and to identify where further investment might be needed in risk management and wind-down planning. Firms should also consider the nature, scale and complexity of their business when applying the FCA's findings.

To read more, please click here.

ESMA sets four principles in addressing greenwashing risks in support of sustainable investments

The European Securities and Markets Authority (ESMA) has issued new guidance urging financial services firms in the EU to ensure all sustainability-related claims are accurate, clear and well-substantiated. Aimed at preventing greenwashing, the four guiding principles apply to all non-regulatory communications and stress that claims must fairly represent the sustainability impact of products and services. 

Companies, including asset and fund managers, should avoid exaggeration, cherry-picking data or using vague or misleading language. All claims must be based on reliable, up-to-date information and supported by credible evidence and fair methodologies. ESMA emphasised that whilst the guidance doesn’t impose new disclosure rules, it reminds firms of their duty to communicate in a way that is not misleading. The move follows concerns over weak supervision by national regulators and highlights ESMA’s intent to strengthen oversight of sustainability claims and ensure better compliance with existing EU rules on sustainability disclosures.

To read the ESMA's guidance, please click here. 

FCA expands rules on bullying and harassment in financial services

The FCA will extend its rules on bullying, harassment and discrimination - known as non-financial misconduct - beyond the banking sector to cover around 37,000 regulated firms from 1 September 2026. Under the new rules, serious personal misconduct, such as bullying or harassment, will be treated as a conduct breach for financial professionals. This behaviour will also need to be disclosed in regulatory references, preventing individuals from avoiding accountability when moving between firms.

The FCA has updated its draft guidance on how firms should assess whether someone is "fit and proper" to work in financial services, including considerations of social media activity and private behaviour. A consultation on this guidance is open until 10 September 2025. The move follows FCA research showing bullying and discrimination are common concerns in the UK financial sector.

FCA deputy chief executive Sarah Pritchard said poor behaviour often signals deeper cultural and risk management problems. Legal experts responded to the FCA’s announcement by advising company leaders to begin evaluating their workplace culture now to safeguard against potential future misconduct claims.

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

Upper Tribunal upholds FCA approach to enforcement in DB transfer advice case

The Upper Tribunal has upheld prohibition orders imposed by the FCA on Toni Fox-Bryant and David Price.

Through their firm, CFP Management Ltd, and via its appointed representative, Selectapension Bureau Services Ltd, Fox-Bryant and Price advised on 1,497 defined benefit transfers between April 2015 and October 2017, with their advice resulting in transfers in 99% of those cases. The Tribunal found that recommendations were made without proper information-gathering, and with an attempt to fit client objectives to a recommendation of transferring (rather than the provision of objective, dispassionate advice).

It was felt that the advisory model designed by the pair suffered from systemic design flaws, leading to regular reckless advice. The provision of caveats in the advice itself were not sufficient to cure the reckless advice provided and including these caveats in a recommendation that was unsuitable for a client could not lead to that recommendation being in some way compliant.

Ultimately, the prohibition orders preventing the pair from working in the industry were upheld, and while financial penalties were revised downwards slightly, they still incurred respective penalties of £567,584 and £465,415.

To read the decision, please click here.

Case law updates

HMRC entitled not to pursue end users of tax avoidance scheme

In R (White and another) v HMRC [2025] EWHC 1600 (Admin), the High Court refused permission to apply for judicial review of two decisions by HMRC to exercise its power under section 684(7A)(b) of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003) in relation to contractor loan schemes. 

The claimants provided consultancy services to end users through offshore employers, with the end users paying UK intermediaries. HMRC considered it inappropriate for the end users to apply PAYE to the loans. The claimants consequently received no PAYE credits against the tax. The claimants argued that: (a) HMRC should have enquired further into end users' knowledge; (b) the offshore employers had a UK tax presence; and (c) HMRC made a flawed decision.

The court rejected these arguments, ruling that HMRC had not breached its duty to make reasonable enquiries. There was no evidence of HMRC acting for improper purposes in exercising its power retrospectively. The court also held that the UK intermediaries were not "relevant persons" within section 689 of ITEPA 2003 and that HMRC had not needed to inquire into the claimants' personal circumstances as these could not relieve them of their tax liabilities.

To read the judgment, please click here.

Court rules that loans from remuneration trust to company were disguised remuneration

In Marlborough DP Ltd v HMRC [2025] EWCA Civ 796, the Court of Appeal upheld the decision of the Upper Tribunal, that sums paid by a company by way of loans to and from an offshore remuneration trust were taxable under Part 7A of ITEPA 2003 (Part 7A) and that no corporation tax deduction was allowed for the company.

The Court of Appeal held that the loans were made "in connection with" the shareholder's employment. It was also decided that the money had not been distributed as dividends but as a loan, which was key as Part 7A applied to loans. The Court of Appeal agreed with the Upper Tribunal that contributions to the trust were not deductible for corporation tax purposes as they were not incurred wholly and exclusively for the purposes of the company's trade. The intended benefit from the tax avoidance scheme was an end in itself.

To read the judgment, please click here.

With thanks to this week's contributors: Shauna Giddens Daniel Parkin, Rebekah Bayliss, Haiying Li, Damien O'Malley, Nitin Mathias, Faheem Pervez and Joe Towse