Welcome to the UKGI weekly regulation update service for Aviva ABC brokers

Context

The FCA has published a blog by Jonathan Pearson, FCA Head of Consumer Policy, about progress towards the ‘Year 2 Board report’, and what comes next.  Under the Consumer Duty, firms must report annually on what their monitoring found about customer outcomes, and what actions they will take as a result.  Pearson observes that firms have improved, but more progress is needed as he reflects on what firms and the FCA have learned from ‘year 2’.

Key points to note and next actions

• In comparing ‘year 1’ and ‘year 2’ reports, the blog notes where reports have improved.  In particular, there is commentary about stronger governance and clearer Board oversight, better action plans and ownership, and broader and more insightful data.
• Under the heading ‘Where firms need to do more’, there is commentary under these headings:
  • Clearly link data to customer outcomes
  • Monitor outcomes delivered by third parties
  • Evidence meaningful Board challenge
  • Deepen assessment of consumer understanding and support
• Pearson notes that, looking ahead, the improvements the FCA has seen show that firms continue to move in the right direction, and the FCA wants firms to draw on these insights as they approach their 3rd year submissions.
• Firms should continue strengthening their outcome monitoring, governance and distribution oversight so that the Duty continues to deliver good outcomes for consumers.
• The FCA will continue to support the industry by sharing examples of good and poor practice in relation to Consumer Duty Board Reports, including providing extra insights to help smaller firms apply the Duty. 

Context

The FCA has updated its ‘Alert for firms: fake FCA communications’ web page with details of fake letters claiming to be from Sarah Pritchard, FCA Deputy Chief Executive, and referencing a fake FCA employee.

Key points to note and next actions

• The letter mentions a supervisory review in relation to a bank and includes a fake FCA phone number (March and April 2026).
• The communications listed on this web page are only the ones the FCA is aware of. If firms think they have been contacted by a fraudster, please report it to the FCA. It could prevent others falling victim to a scam.
• The web page reminds firms that the FCA only ever sends e-mails ending in @fca.org.uk, and lists other fake e-mail domains that it is aware that have been used in the past.
• The FCA reminds firms that they should always delete suspicious e-mails without opening them.

Context

The FCA has published details of a First Supervisory Notice it issued on 20 March 2026 to Conclusive Financial Ltd (Conclusive), a claims management company, which also trades as PCP Refunds.  Conclusive was required to remove its advertising and update or take down its website until it complied with the FCA’s rules.  Conclusive has since removed the banned adverts.  All firms should take note of the issues involved in this case (unauthorised content, misleading claims, use of the FCA logo, and a lack of clarity about fees).

Key points to note and next actions

• Adverts which used edited, unauthorised clips of Martin Lewis to make misleading claims about average motor finance compensation, and used the FCA logo without permission, have been banned by the FCA.
• The FCA was also concerned that some of the firm’s adverts stated consumers would receive £1,846 on average for compensation for motor finance claims, with no explanation of how they reached this figure.
• Conclusive also promoted a ‘No Win, No Fee’ service on its websites, without a proper explanation of the fees, including any exit fees, people would be charged. It did not tell consumers that they could make claims for free to their lender or to the Financial Ombudsman Service without the need to use a CMC.
• Consumers who have engaged with Conclusive, and believe they have been misled by its advertising, should complain directly to Conclusive. If consumers are unhappy with the outcome, they can refer their complaint to FOS.

Context

The FCA has published a report presenting the findings of its Synthetic Data and Anti‑Money Laundering project.  The report summarises the work it has done, jointly with the Alan Turing Institute, Plenitude Consulting and Napier AI, to generate a synthetic data set that will be used to foster innovation in the detection of money laundering whilst safeguarding privacy.

Key points to note and next actions

• Progress in combatting money laundering depends on access to detailed financial data, but legal and privacy constraints often restrict sharing of such information.
• This project aims to tackle these challenges by collaborating to create a fully synthetic dataset created using real data from UK retail banking, enhanced with realistic synthetic money laundering scenarios observed in financial markets.
• The report sets out the context and methodology of the project work, and explores:
  • testing and evaluation;
  • limitations and challenges; and
  • risks and next steps.
• The FCA will make this dataset available through the Digital Sandbox as part of the upcoming Synthetic Data AML Solution Sprint, inviting firms to take part to demonstrate how new technologies such as AI can help in the fight against money laundering. Participants will use the data throughout the sprint and reconvene to share insights on how synthetic data can support innovation in the fight against financial crime.
• Further details for firms that wish to apply for the Data Sprint can be found here – applications close on 26 April 2026.
• The FCA hopes this project will show that synthetic data can help regulators and firms work together, supporting beneficial innovation in the detection of money laundering.

Context

A blog by Alison Walters, Director of consumer finance, explains how the FCA is using credit-file data and innovative analytics to track consumer journeys and more effectively understand financial distress. The FCA’s goal is evidence-based, targeted regulation that achieves good outcomes for consumers and this blog explains one way it has been doing that, in a proof-of-concept undertaken by the team of Isabela Barra, Daniel Bogiatzis-Gibbons, Lawrence Charles, and Wenjin Li (detailed results in the Technical Annex (PDF)). 

Key points to note and next actions

The FCA draws on credit file information from a major Credit Reference Agency (CRA), applying advanced statistical methods to draw new insights about which consumers are likely to fall into distress on their credit products and when, which enables the FCA to spot patterns that reveal emerging or disproportionate harm, sharpen focus on affordability and vulnerability, and get ahead of risks with earlier, more targeted supervision and timely engagement with firms.

The FCA is looking at whole credit journeys, not snapshots. New datasets and uses of existing ones are driving analysis improvements. Traditional credit indicators include delinquency rates, credit scores, and payment histories which tend to flag problems that have already happened.

This new approach tracks how people move between different states of financial stability, emerging stress, and acute distress. By spotting those common patterns in consumers’ credit journeys early, it helps prioritise groups of people and firms where financial stress is emerging. The FCA assigns each person to one of 5 segments:

1. Distress (about 5% of users).
2. At Risk (about 5% of users)
3. Secured Credit Users (about 1 in 3 users)
4. Unsecured Credit Users (about 1 in 5 users)
5. Low Credit Engagement (about 1 in 3 users)

Building on this work, the FCA will monitor how consumer journeys in credit develop over time. It will help understand how people are accessing credit products and can proactively identify potential risks, allowing the FCA to target supervision more effectively.

Context

Consumers and businesses could be given greater control over their financial data to help secure better deals, under a vision for open finance published by the FCA.

Key points to note and next actions

• Open finance will allow people and businesses to securely share financial data with authorised providers, improving access to products such as mortgages, investments, savings and pensions.
• Sharing richer financial data will enable more personalised and inclusive financial services, more competitive pricing, and stronger fraud protection.
• The FCA will prioritise using open finance to help SMEs access credit more easily and speed up loan applications.
• Open finance will also be explored as a way to help consumers better manage and access mortgages.
• The FCA views open finance as a transformative shift that gives consumers and businesses greater control over their data while supporting innovation, competition and economic growth.
• In 2026, the FCA will work with industry, consumer groups and other regulators to develop practical use cases via its Smart Data Accelerator and PRISM Taskforce.
• Industry leaders believe open finance can drive a new wave of fintech innovation and enable wider adoption of agentic AI, provided consumer trust is maintained.
• The FCA will collaborate with HM Treasury on a regulatory framework for open finance by the end of 2027.

Context

The FCA has published Board minutes from its 26 February 2026 meeting., which included discussions on the proposed approach to the Advice Guidance Boundary Review, the Mortgage Rule Review, and the Cost Benefit Analysis (CBA) Panel’s Annual Report.  The Board also noted updates from the Chair of the Policy and Rules Committee and the Chair of the FCA and PSR Audit Co-Committee, including the Biannual complaints report and the FCA Pension Plan review.

Key points to note and next actions

The Board received the proposed 2026/27 Business plan and budget for review and approved the following for the 2026/27 financial year:

• A financial cost budget and parameters totalling £781.4 million
• A 1% increase to Ongoing Regulatory Activity (ORA) fees
• A flat headcount, with a gross Full-Time Employee (FTE) budget of 5,500

Papers for noting included the Approach to Annual Report and Accounts 2025-26, External Whistleblowing plan implementation update and Providing assurance on how FCA teams consider views from the independent statutory panels.

The meeting highlighted the importance of good governance and a healthy firm culture for achieving good outcomes for firms, clients, and the market.

Context

EIOPA has issued a letter to EU Institutions on the AI Act and EU Insurance legislation proposals for clarifying the application of the AI Act.

Key points to note and next actions

Points in EIOPA’s letter include:

• Risk-Based Approach: The AI Act introduces a risk-based approach to AI regulation, categorising AI systems into four risk classes: prohibited, high-risk, limited-risk, and minimal-risk. This allows for different levels of obligations based on the potential impact of the AI system on human safety, rights, and freedoms. 
• Compliance Requirements: The Act imposes new regulatory requirements on AI systems, including those in the high-risk category which may directly or indirectly capture insurance-related AI use cases
• Insurance Sector: The AI Act is particularly relevant to the insurance industry, an early adopter of AI systems. The Act aims to ensure that AI systems are safe, transparent, traceable, non-discriminatory, and environmentally friendly.
• Governance and Risk Management: The Act establishes a coordinated governance system where national authorities, the European AI Board, and the Commission, work together to ensure the effective implementation and enforcement of the AI rules. 
• AI Literacy: As of February 2025, providers and deployers of AI systems, including insurance service providers, must ensure AI literacy among their staff. 

These points highlight the importance of understanding the AI Act’s implications for the insurance sector and the need for compliance with the Act’s requirements.

Context

OFSI has published its Strategy for 2026-2029. It sets out OFSI’s core objective: to ensure financial sanctions are effective, resilient and impactful. The Strategy reflects the growing use of sanctions amid geopolitical instability, aligned with challenges and opportunities OFSI expects over the next three years. This year marks ten years since the OFSI was established.  Over those ten years, OFSI has built stronger capability and confidence, enhancing licensing, enforcement and intelligence, deepening international partnerships, and supporting firms to navigate increasingly complex sanctions regimes. 

Key points to note and next actions

• The Strategy sets out a renewed focus on enhanced understanding of threats grounded in data and insight; high quality licensing, enforcement and compliance support; and strong partnerships with industry, across Government and internationally.
• At its heart is a new, clear operating model: “Promote, Enable, Respond and Change” (PERC).

OFSI will:

• Focus policy, operational decisions, and resources on the areas of greatest impact, grounded in high-quality data, evidence and a stronger understanding of threats, risks and context;
• Maintain open, regular engagement with industry; and
• Work in close partnership across government, with regulators and law enforcement, and with the private sector and international allies to strengthen the impact of UK financial sanctions and support effective compliance.

Context

The ASA and CAP have published their Annual Report 2025, in a downloadable .pdf format.  The announcement includes a one-minute embedded video introducing the Report from Guy Parker, ASA Chief Executive.

Key points to note and next actions

The Report highlights the continued transformation of the ASA into a proactive and preventative regulator in an era of rising expectations in online regulation.  It showcases how the ASA and CAP have used the Active Ad Monitoring system to process 60 million ads, identifying and tackling issues in high-priority areas, including cosmetic surgery, weight-loss injections, alcohol and climate claims.

The Annual Report also highlights how ASA and CAP have used research to help shape their work, and outlines the main successes in 2025.

• The ASA resolved over 40,000 complaints from the public about 25,397 ads.
• Through their work, 22,383 ads were amended or removed.
• CAP helped businesses get their ads right the first time, and delivered 596,000 pieces of advice, training and bespoke queries through its Copy Advice service.
• ASA and CAP continued to develop their Intermediary and Platform Principles framework, strengthening accountability of social media platforms in promoting the CAP Code to their advertisers, and supporting enforcement of the rules, among other commitments.
• They worked towards securing a sustainable funding model for the ASA system.

As technology and society change, the transformation will continue over the next three years of their AI-assisted, collective ad regulation strategy, and beyond.