Money Covered: The Week That Was – 6 November 2026

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

The first episode of Season 5 of our podcast, Money Covered – The Month That Was, is now available. David Allinson and Mel Redding discuss the FCA’s proposed section 404 consumer redress scheme for vehicle finance.

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

Headline development

Motor finance redress scheme: FCA set expectations of early settlement offers during legal challenge

The FCA has reported that 89% of car finance customers who have complained, or are considering complaining, would prefer to receive compensation now rather than wait for ongoing legal challenges to the proposed redress scheme under s.404 of FSMA to conclude. In addition, 86% say they feel comfortable deciding whether to accept an offer, and 61% would accept compensation aligned with the proposed scheme. Earlier payment could have a meaningful impact: 77% say receiving compensation sooner would improve their financial position.

The FCA has confirmed that lenders may make early settlement offers while legal challenges continue, provided customers would receive no less than they would under the compensation scheme. Barclays Partner Finance has already confirmed it will make offers to some eligible customers.

Customers must be clearly informed of the consequences of accepting an offer. They can keep the money even if the final scheme results in lower compensation. However, they cannot claim additional amounts if the eventual outcome would have entitled them to more. Alternatively, customers can decline the offer and remain within the scheme. The compensation scheme is partially paused pending legal proceedings scheduled for 16 February and 3 March 2027.

The FCA has also published guidance to help consumers make informed decisions and will update its website with details of participating lenders. Customers who have not yet complained should contact their lender directly, and should be cautious about using claims management companies, which may charge up to 36% of any compensation (including VAT).

To read more, please click here. 

Tax practitioners

Prohibiting promotion of tax avoidance schemes

On 30 October 2026, His Majesty's Revenue and Customs (HMRC) published new guidance clarifying penalties for agents and others who promote certain tax avoidance arrangements, warning that breaches can trigger both criminal sanctions and significant civil fines. According to the guidance, promoters of schemes caught by the prohibition of the promotion of certain tax schemes (POP) can face up to two years’ imprisonment. HMRC also set out the potential civil exposure, including penalties of up to £1 million and an additional £5,000 per participant in the promoted arrangement.

POP came into force on 19 May 2026 and is aimed at schemes marketed as providing tax advantages that do not in fact exist. HMRC’s updated guidance is intended to explain how the prohibition operates and the consequences for those who continue to promote arrangements within scope. The measures sit within a broader government crackdown on tax avoidance. The Labour government introduced the POP rules as part of the Finance Act 2026, and the report notes that HMRC’s wider enforcement toolkit is also expanding.

In the autumn budget presented on 28 October 2026, the government announced plans to give HMRC new powers to collect overdue tax from businesses and individuals who repeatedly fail to respond to payment demands. Separately, the promoters of tax avoidance schemes legislation is set to be expanded, with changes expected to bring VAT schemes within scope and allow HMRC to issue stop notices more widely.

Click here to read the policy paper.

Pensions

TPR issues AI guidance for pension scheme managers and trustees

The Pensions Regulator (TPR) has published guidance for pension scheme managers and trustees on how AI could be used to improve efficiency, value for money and member outcomes — while ensuring the associated risks (including cyber security) are properly understood and managed. TPR stresses that trustees do not need to be AI experts, but they remain accountable for decisions affecting the scheme and must understand enough to ask the right questions, challenge providers and maintain effective oversight. The guidance is framed as an application of existing trustee duties and good governance rather than a separate set of new regulatory requirements.

TPR sets out seven principles for the responsible use of AI, which is based on its own AI use:

1.    Starting with the problem (not the technology).
2.    Keeping human responsibility central.
3.    Treating governance as ongoing.
4.    Planning for disruption.
5.    Ensuring good data quality.
6.    Supporting transparency/explainability; and
7.    Promoting fair and accessible outcomes. 

TPR has also referenced an “AI jargon buster” developed by its data and digital industry working group to support trustee conversations with advisers and vendors.

To read the press release, please click here. To read the guidance, please click here.

Government to push ahead with pension scam shakeup

The UK government confirmed earlier this week that it will allow retirement saving scheme trustees to stop a pension transfer when there is not a clear link between a saver and the new plan, as part of its goal to come down on scams in the sector. In particular, the Department for Work and Pensions (DWP) has stated that it intends to proceed with measures designed to prevent the risks associated with small self-administered pension schemes. 

The government said it will now require trustees to request evidence of an employment connection between the transferring member and the receiving self-administered pension scheme. A red flag will appear if evidence cannot be provided, and the transfer will be halted.

Additionally, the government will move forwards with plans to include a provision that allows trustees to grant a transfer if the receiving pension plan is considered to be "reputable", though at present it has not been made clear whether a list of factors to assess reputability will be included in guidance, or built into the regulations themselves.

The government's full consultation outcome can be read here.

Draft regulations to bring pension trustees’ securitisation due-diligence obligations under FCA rules

The UK government has now published their draft Securitisation (Amendment and Miscellaneous Provisions) Regulations 2026, which will change the due-diligence requirements for occupational pension schemes investing in securitisations. 

The aim of the Regulations is to replace the separate statutory provisions covering pension schemes' initial and ongoing due diligence with a single provision referring to the FCA rules. 

Trustees or scheme managers will be required to comply with the FCA's due-diligence rules for institutional investors, both before investing and throughout the period they hold the investment, providing they are not also acting as the originator, sponsor, or original lender in the transaction.

The due-diligence changes are expected to come into force from 1 January 2027, subject to the Regulations receiving parliamentary approval.

The draft Regulations can be read in full, here.

Regulatory developments for FCA regulated entities

FCA unveils new ESG Ratings 

On 3 November 2026, the FCA unveiled a new UK regulatory regime for environmental, social and governance (ESG) rating providers, bringing the sector into FCA supervision for the first time. 

The framework aims to raise standards and improve the transparency, reliability and comparability of ESG ratings used by investors, asset managers and lenders, helping market participants make better-informed decisions.

Under the rules, firms and organisations producing and communicating ESG ratings and assessments will face requirements on transparency, governance, systems and controls, the management of conflicts of interest, and engagement with users of ratings and rated entities. The FCA said the regime is designed to be proportionate to firms’ size and activities, and is informed by international and existing standards.

Laura Dawes, director of authorisations and sustainable finance, said “trusted information is essential” and urged firms to check whether they are in scope and begin preparing for authorisation. ESG rating providers operating in the UK will be able to apply for FCA authorisation from 24 June 2027, ahead of the regime taking effect on 29 June 2028. The FCA will offer webinars and access to its Pre Application Support Service.

Click here to read more on the FCA's website.

With thanks to this week's contributors: Lauren Butler, Andrew Cox, Haiying Li, Daniel Parkin, Damien O'Malley and Dorian Nunzek.

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