Money Covered: The Week That Was – 6 February 2026

Welcome to The Week That Was, a round-up of key events in the financial services sector over the last seven days.

On the fifth episode of Season 4 of our podcast, Money Covered – The Month That Was, Mel is joined by David Allinson to discuss the FCA’s proposed section 404 consumer redress scheme for vehicle finance.

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

Our latest edition of the Financial Ombudsman Newsletter is out now and can be found here.

Headline development

Order creating new regulated activity of providing targeted support published

Legislation amending the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544) (RAO), creating a new regulated activity of targeted support, was published on 30 January 2026. This is the result of the FCA and HM Treasury Advice Guidance Boundary Review.

The Financial Services and Markets Act 2000 (Regulated Activities) (Providing Targeted Support) (Amendment) Order 2026 (SI 2026/74) provides that a person will not be undertaking the existing regulated activity of advising on investments, when providing targeted support.

The next key date is 23 February 2026, which is the date from which the FCA will be able to make rules and grant Part 4A permissions relating to the new activity. After that, the Order will come into force on 6 April 2026.

Further legislative changes are intended by HM Treasury and will ensure alignment between advising on investments in relevant secondary legislation and the regulation of targeted support.

To read the FCA's near final rules on targeted support, please click here.

To read the Order, please click here.

Financial institutions

FCA and PSR set out priorities for delivering the National Payments Vision

In a speech at the Payments Regulation and Innovation Summit 2026, FCA executive director David Geale set out the role of the FCA and the Payment Systems Regulator in delivering the National Payments Vision.

Geale said the priority is a payments system that “works for everyone”, recognising that different people and businesses will rely on different payment methods at different moments in life. While cash and banking hubs remain important, he stressed that the wider objective is to ensure that a range of payment options can co-exist and operate alongside one another, including cards, digital wallets, open banking, Faster Payments and newer developments such as stablecoin and tokenised deposits.

He emphasised that the role of regulators is not "to pick winners”, but to make sure the system as a whole is trusted, coherent and future-proof, whatever form a payment takes. He noted the scale of UK payments activity, highlighting that payment systems moved £107 trillion in 2023, equivalent to around 44 times GDP.

Geale confirmed that the FCA and PSR are working closely with the Bank of England and HM Treasury through the Payments Vision Delivery Committee, with a coordinated approach intended to maximise collective impact. Current work includes publication of the Payments Forward Plan, setting out a sequence of initiatives across retail and wholesale payments, as well as milestones for modernising payments regulation and aspects of digital assets.

He also addressed commentary around consolidation of the PSR and FCA, stressing that this is “an evolution, not a revolution”. He said the two organisations have been working “hand-in-glove” for years on the issues that matter most in payments, with shared objectives around competition, innovation and consumer protection, and with the PSR retaining its wider focus on service-users, including merchants and payment services.

The speech highlighted recent developments including the APP fraud reimbursement scheme, under which 88% of money lost to APP scams has been reimbursed, returning £112m to victims. Claim volumes are down and firms are resolving most claims within five days.

Geale also pointed to the FCA’s work to support innovation at pace, including the launch of an AI Supercharged Sandbox and a stablecoin-specific cohort within the Regulatory Sandbox. He noted that the FCA has published its consultation paper on crypto regulation and will set out the final rules and framework in early summer.

Looking ahead, Geale said the National Payments Vision is about ensuring the UK’s payments infrastructure can cope with scale, complexity and change, preserving what works today while building the next generation, and maintaining resilience and interoperability both domestically and internationally.

To read more, please click here.

Pensions

Deputy Pensions Ombudsman dismisses complaint regarding due diligence on a defined benefit transfer 

The Deputy Pensions Ombudsman (DPO) in the case of Mr S (CAS-54901-V6R7) (25 November 2025), dismissed a complaint regarding the transfer of a pension out of a defined benefit scheme (DB) into another scheme which later failed. 

In 2014, Mr S engaged an Independent Financial Advisor (IFA) to assist with transferring his DB pension out of the scheme. At the time of the request, the DB Trustee provided Mr S with a leaflet which outlined the risks of pension fraud. Mr S signed a declaration to confirm that he received, read and understood this leaflet. Prior to the transfer and throughout 2014, the DB Trustee requested various documents and undertook several information gathering steps before proceeding with the transfer. In particular, the DB Trustee confirmed the IFA was regulated by the FCA, the receiving scheme was registered with the Financial Services Compensation Scheme (FSCS) and sought confirmations from Mr S directly. The pension transfer completed in April 2015, but unfortunately the scheme failed in January 2018

Mr S sought to bring a complaint against the DB Trustee for the alleged failure to conduct adequate due diligence on the receiving scheme which resulted in the loss of Mr S' entire pension.  It was the DB Trustee's position that adequate due diligence was undertaken at the time of the transfer within the context of Mr S being over the age of 55 (for the purposes of pension liberation), The Pension Regulator's guidance was followed regarding a fraud warning being provided, and Mr S was not receiving advice from the DB Trustee as he had engaged an IFA. 

The DPO agreed with the DB Trustee and decided that the DB Trustee did not owe a duty of care to Mr S to carry out further due diligence checks on the receiving scheme as Mr S' request to transfer out was made pursuant to the Pensions Act 1993. Mr S was therefore limited to the FCSC's compensation cap of £50,000, against a loss of £151,638.46, in respect of the IFA advice only. 

To read the decision, please click here.

Pensions Ombudsman finds administrator liable for errors caused by automated system

The DPO also recently decided the case of Mrs K (CAS-90501-T3V1) (25 November 2025), in which the pensions administrator, the NHS Business Services Authority (NHS BSA) was found liable for maladministration as a result of incorrect pensions estimates provided to Mrs K which had been generated by MHS BSA's automated system.  

Mrs K was a member of the NHS Pensions Scheme.  She sought various estimates of her pension benefits if she were to retire early between 2018 and 2020.  Her employer provided these, via their access to NHS BSA's automated system, and the estimates provided between 2018 and up through May 2020 were correct.  Mrs K was provided an estimate in October 2020 which was more than double the figures she'd last been provided.

She queried the apparent error with her employer, who (incorrectly) stated the estimate was correct and issued a second incorrect estimate in November 2020 which aligned with the October 2020 estimate.  Mrs K subsequently gave notice of her retirement and retired in March 2020, which she stated was in reliance on the incorrect October and November 2020 estimates.  

Mrs K's complaint sought compensation for both financial loss and distress and inconvenience caused by the errors.  The NHS BSA asserted that the estimates could not reasonably be relied up to make retirement decisions, as disclaimers were included with the estimates, and that, in any event, Mrs K had not suffered financial loss as a result of the errors because the evidence she provided related to pre-existing debts and she had the opportunity to reverse her retirement decision without any negative consequences but did not attempt to do so.  NHS BSA also defended the errors, noting that Mrs K employer had provided them and had not passed her query following the October 2020 estimate to NHS BSA.  

DPO partly upheld Mrs K's complaint, finding that as the employer was an authorised user of NHS BSA's automated system, they were essentially NHS BSA's representatives and so NHS BSA was ultimately responsible for the erroneous estimates.  DPO award Mrs k £1,000 on account of distress and inconvenience as a result.

However, DPO found that Mrs K had not suffered a financial loss as a result of the errors, agreeing with NHS BSA that the estimates should not have been relied upon to make the decision to retire, Mrs K could have reversed her retirement decision, and the losses complained of related to pre-existing debts, and so were not caused by the retirement decision in any event.  

To read the decision, click here.

FOS developments

FOS sees lowest complaint volumes in two years

The Financial Ombudsman Service (FOS) has reported its lowest quarterly case volumes in two years, with 47,300 new complaints recorded between October and December 2025. That’s down from 68,400 during the same period the year before.

FOS said volumes are now broadly in line with 2023/24 levels, and noted that more people are bringing complaints directly, rather than using professional representatives. Case numbers have remained steady over recent months, with 46,300 received in Q2 2025/26. The figures appear to reflect both internal reforms and external factors, including the FCA’s pause on complaint handling in motor finance commission cases.

The drop in volumes comes alongside changes FOS has introduced, including charging professional representatives to submit complaints. FOS says that’s helping to cut back speculative or poorly evidenced claims and improve overall quality. So far this financial year, the percentage of complaints withdrawn or abandoned by representatives has fallen to 19%, compared with more than a third last year. There’s also been a steep decline in irresponsible lending complaints – down to 4,800 this quarter from 13,200 in the same period last year.

Interim chief ombudsman James Dipple-Johnstone said the focus is on strengthening the service and maintaining trust in how complaints are resolved. Whilst volumes have dropped, many see this as a result of structural changes rather than a fall in consumer willingness to raise concerns. There are fewer mass-submitted complaints and fewer claims brought by professional representatives, but complaints about core financial products remain steady.

FOS appears focused on handling complaints about core products with more consistency and efficiency. The figures point to a change in how the system is operating, rather than a drop in underlying demand.

To read more, please click here.

Regulatory developments for FCA regulated entities

FCA Confirms No APR and Commission Cap for Premium Value Finance Market 

On 3 February 2026, the FCA released the final report for its Premium Finance Market Study (the Report). 

The Report confirmed that the FCA would not impose a cap on APR fees or restrict commissions on the premium finance market. Instead, the FCA proposed to use fair value assessments to ensure customers protection rather than implement new rules.

This decision comes as a disappointment to consumer lobbyists who felt the decision was in contradiction with the FCA's previous description of premium finance arrangements as "a tax on the poor". 

Whilst premium finance is used by c. 23 million customers, the FCA has acknowledged that such arrangements are more likely to be used by poorer buyers who are unable to pay the annual cost of a premium up front. These consumers can face interest charges as high as 38% if they choose to pay their annual premiums in instalments. 

The FCA has responded to criticism by asserting that "more significant interventions – for example forcing companies to offer 0% APR [may] reduce the availability of premium finance, which would negatively affect vulnerable customers who would otherwise struggle to pay for insurance." 

The FCA has promised to "act further" in order to enforce fair value requirements. 

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

FCA and SRA issue warning to claims firms over excessive exit charges

The FCA and the SRA have joined forces in warning claims management companies (CMCs) and law firms handling motor finance commission claims about improper practices, with a sharp focus on excessive exit and termination fees.

The warning follows prior FCA scrutiny of two FCA-regulated CMCs which led to the CMCs agreeing to amend their termination fees and protecting approximately 70,000 consumers from excessive charges as a result. 

Any termination or 'exit' fee should be reasonable and reflect only work actually done and must be clearly stated before services start. 

To read more, please click here. 

Relevant case law updates

Upper Tribunal Releases Ruling on FCA Financial Penalties on Bank 

The Upper Tribunal (Tax and Chancery Chamber) was asked to rule on a decision notice by the FCA that imposed financial penalties of £10m against Banque Havilland SA (the "Bank"), £352,000 against Edmund Rowland, a Board director and CEO of the Bank's UK Branch, and £14,200 against Vlafimir Bolelyy, Mr. Rowland's personal assistant, for breaching Principle 1 (Failing to act with integrity). 

The decision notice related to the production of a document in 2017 which the FCA asserted demonstrated an intention by the Bank to manipulate the market and put pressure on the Qatari currency in order to break the peg between the Watari Riyal and the US dollar. The document was created due to an instruction from Mubadala, a United Arab Emirates (UAE) sovereign wealth fund, who wanted advice on how to protect the UAE's Qatari asset values during the Qatar diplomatic blockade. 

The Bank argued that the alleged conduct did not breach Principle 1 on the basis that the conduct did not form part of the Bank's business, was not attributable to the Bank and did not amount to regulated or ancillary activities. Mr Rowland and Mr Bolelyy put forward similar arguments. 

In relation to Mr Rowland and Mr Bolelyy, the Tribunal applied the approach for vicarious liability as a guide to determine the Bank's business for Principle 1 purposes, their roles' authorised functions and whether there was sufficient connection between their roles and the wrongful conduct. 

The financial penalties were upheld against Mr Rowland as he was (i) acting in the course of employment as document preparation fell within their contractual roles, (ii) used Bank time and resources, and (iii) intended to benefit the Bank's interests. 

Interestingly, the Tribunal was willing to look past Mr Bolelyy's position and examine the actions that he took. Given that his actions extended beyond that of a personal assistant into strategy research and analysis, it was accepted that his conduct was sufficient to warrant the financial penalties imposed. 

To read the full decision, please click here.  

With thanks to this week's contributors: James Parsons, Alison Thomas, Daniel Goh, Heather Buttifant, Ben Simmonds, Kerone Thomas, Rebekah Bayliss