Money Covered: The Week That Was – 8 August 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

Supreme Court ruling narrows scope of motor finance liability.

The eagerly anticipated Supreme Court judgment of Hopcraft and another (Respondents) v Close Brothers Limited and others [2025] was handed down last Friday. In a landmark ruling, and much to the delight of the consumer finance industry, the Supreme Court ruled that finance brokers (who in this case were motor dealers) do not owe a fiduciary duty to consumers and consumers are not entitled to claim back commission paid to a broker from the lender. Notably however, the Court has ruled that there are circumstances where a relationship between a broker and consumer could be deemed 'unfair', which opens a path for consumers to reclaim commission. 

The Supreme Court judgment overturns the Court of Appeal decision, which found that the finance brokers owed a fiduciary duty and in circumstances where the broker had not obtained informed consent, the commission payment was recoverable from the lender. This decision sent shockwaves throughout the industry and opened the possibility of tens of thousands of consumers looking to bring claims against brokers and lenders, seeking repayment of the commission. This fear led to the consumer finance industry allegedly setting aside c.£40 billion to deal with the anticipated claims. 

Whilst it is mostly good news for lenders and brokers, the Supreme Court also ruled that the relationship between the consumer and lender in one case was unfair pursuant to s.140A of the Consumer Credit Act 1974. In these circumstances, the Supreme Court found that the consumer could claim back commission. Therefore, the industry is still under scrutiny. 

The Financial Conduct Authority has confirmed that it will consult on a consumer redress scheme, with the consultation due in October this year. However, following the Supreme Court Judgment, the estimated level of redress has now reduced drastically to £9-18 billion. 

To read RPC detailed analysis on the decision and implications the decision will have on the industry, please click here.

Pensions

Personal representatives liable for paying IHT on unused pension funds from April 2027

On 21 July, the government announced draft legislation which will require personal representatives, as opposed to pension scheme administrators, to report and pay inheritance tax (IHT) on unused pension funds. The announcement, which remains largely unchanged from the proposal in the Autumn Budget, has caused some concern amongst practitioners, who are concerned about the additional administration that will be required. 

Roddy Munro, pension specialist at Quilter, expressed concern over the recent announcement noting that "only a small fraction of estates will pay more tax, a far greater number will face needless complexity, delays, and stress". This concern is echoed by Rachel Vahey, head of public policy at AJ Bell who consider that the changes will simply result in "additional costs for bereaved families".

To read more, please click here. 

FOS Developments

FOS report drop in complaints

In the new quarterly figures published on 7 August, FOS report a decrease of roughly 10% in the amount of complaints about everyday financial products, such as current accounts, credit cards and motor insurance. There has also been a more significant decease in complaints about perceived irresponsible and unaffordable lending, with 50% less complaints being received in the first 3 months of the financial year. 

FOS consider that the drop in complaints being made is likely due to the recently introduced charges for professional representatives who bring more than 10 complaints in a single year. The reform was intended to encourage representatives to submit better-evidenced complaints with realistic merits assessments before bringing the complaints. It is likely that the complaints data brought by professional representatives will continue to drop in the upcoming quarter. 

To read more, please click here. 

Regulatory developments for FCA regulated entities

FCA set out changes to payment safeguarding rules

Following a lengthy consultation period, the FCA have announced that new rules regarding the safeguard of customer money will come into force from May 2026.

The rules, which will include annual audits, monthly reporting and daily balance checks, are designed so that firms will keep customer money separate from the firm's own money so that refunds will be possible if the firm fails.

The rules will be proportionally applied to smaller firms and will be used to address issues the FCA have found in previously failed firms.

To read more, please click here.

FCA Climate Reporting

In 2021 the FCA finalised the climate disclosure rules which applied to asset managers, life insurers and FCA regulated pension providers. The rules required these professionals to adhere to climate-based reporting as part of the Taskforce on Climate-related Financial Disclosures (TCFD). The FCA then used the findings of the TCFD, along with the International Sustainability Standards Board in 2023 to incorporate recommendations into a regime.

The FCA has now reviewed the regime and has made a number of findings. The FCA has found that firms are increasingly considering climate risks, and that these risks are being factored into decision making. Some firms found some information under the TCFD to be too complex for retail clients which led to reduced engagement. The FCA also found that firms appeared to be stronger when considering retrospective data over future data and asset managers particularly found that requirement to report under multiple regimes to be disproportionate.

As a result of the findings the FCA has now updated its sustainability reporting requirements to set out how firms can efficiently report. The FCA are continuing to assess ways to streamline the framework in the areas of disclosure, reporting and international alignment.

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

FCA releases ruling on Woodford, imposing a £46m fine.

The FCA confirmed this week that it had fined Mr Neil Woodford and Woodford Investment Management (WIM) a combined £46m following its investigation into WIM and the collapse of the Woodford Equity Income Fund (WEIF).

The FCA states that the reason for this finding was a failure by Mr Woodford and WIM to adequately manage the liquidity of WEIF, resulting in the suspension of WEIF and significant losses to its primarily retail investors. In a press release, the FCA said that Mr Woodford fundamentally failed to accept or acknowledge his responsibility as a senior manager to manage the liquidity of WEIF, allowing it to fall afoul of the FCA's liquidity rules, which require that investors be able to access their funds within 4 days.

Mr Woodford was fined £6m personally, while WIM was fined £40m. Mr Woodford has also been banned from holding senior management roles and managing funds for retail investors.

Mr Woodford, who received CBE honours in 2015 for his services to business and investment, now faces intensifying calls for these to be revoked as a result of the FCA ruling.

To read more, click here.

Relevant case law updates

FTT determines offshore trust domicile for pre-2020 IHT charges.

The First Tier Tribunal (FTT) has considered circumstances where a trust is settled by a person who is not domiciled in the UK, and who subsequently becomes UK-domiciled and later settles further property into the trust. The FTT looked at whether that later-settled property is taxable upon a subsequent chargeable transfer (most commonly death of the settlor) within the meaning of the Inheritance Tax Act 1984.

Where the chargeable transfer happened after July 2020 (e.g. where the settlor died after that date), the position is clear: the changes made by the Finance Act 2020 apply so that the domicile is considered at the point at which property was transferred into trust, not the date on which the trust was initially settled. However, the position is less clear when the transfer occurred before that date: this is what the FTT came to consider in Accuro Trust (Switzerland) SA v HMRC [2025] UKFTT 464 (TC).

The FTT rejected HMRC's arguments that, in respect of further transfers after July 2020 domicile should be considered at the time of transfer and that after-settled property should be treated as excluded property based on the law as 'generally received or adopted in practice'. The FTT concluded that a settlement was made as a matter of trusts law when the trust was initially created (i.e. when the settlor was domiciled in Switzerland).

It remains to be seen whether HMRC will choose to appeal.

You can read the judgment here.

Flexible application of Part 36 costs consequences where an offer is not 'genuine' in respect of counter-claim.

Where a defendant fails to beat a claimant's part 36 offer at trial, CPR r. 36.17(4) contains fairly draconian costs provisions which must be applied by the court unless the court considers it unjust. When considering justness, r. 36.17(5)(e) provides that one point to be considered is whether the offer was a 'genuine' attempt to settle the proceedings.

In Matière SAS v ABM Precast Solutions Ltd [2025] EWHC 2030 (TCC), it fell to the court to determine whether this could entail separate consideration of a claim and counterclaim, with an offer being genuine in respect of one but not the other – it being contended by the defendant that the claimant's offer was not genuine in respect of its counterclaim, which was said to be worth approximately twelve times as much as the principal claim.

Bearing that in mind, Alexander Nissen KC, sitting as a High Court judge, determined that there was no good reason why 'the proceedings' could not be interpreted flexibly to determine that the offer was a genuine attempt to settle the claim but not the counterclaim and displace the default Part 36 costs consequences.

You can read the judgment here.

Tribunal backs taxpayer in R&D discovery assessment appeal

In Realbuzz Group Ltd v HMRC [2025] UKFTT 493 (TC), the First-tier Tribunal (FTT) allowed the taxpayer’s appeal against a discovery assessment issued by HMRC in respect of the 2020 accounting period. The FTT found that HMRC was not entitled to issue the assessment, as the information already provided by the company before the enquiry window closed was sufficient to alert a hypothetical officer to a potential overstatement in the R&D claim.

In March 2021, Realbuzz amended its return for the year ending 30 April 2020 to include a Research and Development relief (R&D) claim of £335,452, which was supported by a technical accountant's report spanning both the 2020 and 2021 tax years.

HMRC subsequently opened an enquiry into the 2021 return in September 2021, which included several of the same projects in the amended 2020 return. In March 2023, a new officer sought to rely on discovery powers to assess the 2020 return on the basis that similar errors were likely.

The FTT accepted that a hypothetical HMRC officer, reviewing the information on file at the time, would have been aware of a potential loss of tax – even if the precise amount was unclear. It also held that such an officer is not assumed to have specialist technical knowledge.

Although a further R&D report was submitted in relation to the 2021 period, the FTT confirmed it did not constitute information “made available” for the 2020 period. That did not affect the outcome which was that the original 2020 submission was sufficient on its own.

The decision serves as a reminder that HMRC cannot rely on discovery where it has already been put on notice within the enquiry window. For R&D claims in particular, a detailed and timely submission remains the most effective protection against later challenge.

To read RPC's blog which covers this decision in more detail, please click here.