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

Context

The FCA has announced that Kanda Products & Services, an authorised credit broker, has gone into liquidation. The firm operated a network of around 700 Introducer Appointed Representatives, mainly tradespeople who introduced customers to Kanda to finance home improvements and other goods and services.

In February 2026 Kanda had agreed to a voluntary requirement with the FCA which sought to address weaknesses in its systems and controls by not appointing any new Appointed Representatives without the FCA’s written consent. On 6 May 2026 the firm appointed FRP Advisory Trading as Liquidators of Kanda.

Key points to note and next actions

Firms with Introducer Appointed Representatives must ensure they maintain adequate oversight of their activities. IAR’s are restricted to introducing customers to the Principal firm, and distributing the Principal’s approved marketing materials. If they undertake any other activity, there is a risk that the IAR may be performing regulated activity, which can lead to customer harm. 

Kanda, as the Principal did not have sufficient systems and controls to demonstrate this, and had a significant number of IAR’s. Whilst Kanda is still authorised by the FCA, and is subject to the FCA’s rules, its move to liquidation is a reminder of the need to maintain adequate oversight over its activities including those of all its IAR’s.

Context

The FCA has published the minutes of its Board meeting held on 26 March 2026.  

Key points to note

Part of the meeting (Section 4, Strategic Discussion) focused on the role of technology in financial services and the regulatory considerations around firms’ increasing adoption of technology. The Board reflected that the FCA’s approach is to enable innovation, whist ensuring the international competitiveness of the UK’s financial services sector, which must be balanced against preventing harm, protecting consumers and maintaining market integrity.

The Board discussed how the FCA can support firms by providing clarity around regulatory expectations, engaging with firms early and using an outcome-focused approach to supervision. The FCA itself has progressed its own technology capabilities and has seen evidence that firms’ use of technology, where appropriately governed, can lead to improved customer outcomes.

There was also an update on the progress of the Mills Review, which is looking at the impact of Artificial Intelligence on financial services. Recommendations will be reported to the FCA Board in June 2026, informing how the FCA can guide and respond to AI-driven transformation in retail financial services.

Context

The FCA has provided its whistleblowing data for Q1 2026, which shows an increase in reports compared to Q4 2025 (from 281 reports to 355 reports).

Key points to note

• The top allegations reported by whistleblowers in Q1 2026 related to Consumer Duty, Conduct and integrity of Leadership and Senior Managers, Systems and Controls, individual conduct (honesty, integrity and reputation), firms’ values and integrity, fraud, non-financial misconduct, unauthorised business and money laundering controls.
• The FCA closed 265 whistleblowing reports between January and March 2026. These included action taken to manage harm in 23 reports, such as enforcement action, requiring a Section 166 Skilled Person Report, restricting a firm’s permissions or withdrawing an individual’s approval.
• Other action taken to reduce harm was reflected in 80 reports, where the FCA may write to or visit a firm, ask for information or ask a firm to attest they are complying with the FCA’s rules.
• The FCA stated that other reports assisted in their work but no direct action was taken, and also that some reports did not suggest any harm had occurred but they would retain the information for future reference.

The FCA also attended the International Whistleblower Roundtable, hosted by the International Organisation of Securities Commissions (IOSCO), where they shared knowledge and good practice across whistleblower programmes in other regulatory jurisdictions. IOSCO is the global body for securities regulators and sets international standards for financial markets regulation. There was strong interest in the FCA’s work, including how they assess and act on disclosures, and also clear that the FCA sees a much higher volume of whistleblowing reports each year compared to other regulators.

Context

The FCA has taken action against an individual adviser resulting in a fine of £755,000 and a ban from the industry.

Key points to note and next actions

• Mr Breuer was the joint owner and sole Director of Bluesky Wealth Management Limited, which provided advice on investments and pensions.
• The firm did not have appropriate Professional Indemnity Insurance in place from April 2019, and Mr Breuer carried on providing pension transfer advice knowing he was not insured. Mr Breuer also misled the FCA regarding the firm’s insurance position.
• In October 2019 the FCA imposed restrictions on the firm which were intended to protect customers and the firm’s assets. Mr Breuer ignored these restrictions and took assets out of Bluesky by paying himself large dividends, taking personal loans and moving money through connected accounts.
• Mr Breuer knew that the FCA had concerns about the firm’s pension transfer advice and the Financial Ombudsman had also upheld several complaints against the firm based on the advice he had provided.
• He then placed Bluesky into an insolvency process leaving substantial customer liabilities of over £200,000 to be met by the Financial Services Compensation Scheme.

In its findings the FCA noted Mr Breuer had known he had no PII cover, failed to comply with the FCA’s requirements and acted with a lack of integrity. It imposed a fine of £755,000 and banned him from working in any regulated activity.

Context

HM Treasury has published its findings following the consultation on ensuring the financial services regulatory environment is effective, proportionate and in line with the Government’s ambition on regulation.

Background

In March 2025 the government set out its Regulation Action Plan which intended that the regulatory system supported growth, was targeted and proportionate, transparent and predictable, while being adaptive to keep pace with innovation. The objective was to make a number of targeted interventions in the regulatory framework, to enhance their statutory objectives.

The Government consulted on this between July and September 2025 through its “Regulatory Environment – Cross Cutting Reforms” document, on proposals which

• Set new and shorter deadlines for determining priority regulatory applications, to make it quicker and easier to do business in the UK
• Requiring the regulators to set out their strategic approach to regulation and supervision
• Strip away duplicative processes to enable the regulators to be more agile and responsive

43 responses were received to the consultation and overall respondents were broadly supportive of the proposed reforms.

Key points to note

The government intends to legislate to bring in:

• New, shorter statutory deadlines for determining applications for new firm authorisations, variations of permission and senior manager approvals
• Require the FCA and PRA to produce new long term strategies at least once every five years
• Require the regulators to have regard to regulatory and supervisory principles, as well as remit letters containing recommendations from the Treasury, when these strategies are produced, and remove the requirement for the regulators to consider these when making day-to-day decisions
• Remove a range of reporting and other procedural requirements from the regulators, which are of lower value to stakeholders.

There will be other legislation to shorten a number of other statutory deadlines such as deadlines for determining requirements imposed by the regulators, financial promotion approvals, and SM&CR variations. The Government has welcomed these steps being taken by the FCA and PRA. The response also referenced the Government’s plans to develop a provisional licences regime for early-stage financial services firms seeking FCA authorisation. The reforms are expected to drive further improvements to the UK’s regulatory environment, to the benefit of firms and consumers.

Context

At the end of April, OFSI marked its 10th birthday by hosting an international conference on financial sanctions at HM Treasury, bringing together partners from across government, industry and international organisations. 

Key points to note

The event reflected on how UK financial sanctions have evolved over the past decade, and the role they play in an increasingly complex global environment. Key themes included: 

• OFSI’s new PERC strategy (Promote, Enable, Respond, Change) and how it is being delivered in practice  
• The importance of partnerships across government, industry and international allies  
• The opportunities and risks presented by technological change  

Discussions reinforced that sanctions are most effective when delivered collectively, through strong coordination, clear implementation and ongoing engagement.

Context

OFSI has announced changes to the Sanctions (EU Exit) (Miscellaneous Amendments) Regulations 2026, which are now in force.

Key points to note

Changes to relevant firms’ reporting from euros to pounds:

• Across all UK sanctions regulations, the definitions of high value dealers and art market participants within the relevant firms regulations are updated so that monetary thresholds are expressed in pounds sterling (£) rather than euros (€). In particular, the €10,000 threshold is being replaced with a £10,000 threshold. 
• This aligns sanctions reporting obligations with upcoming changes to those in the UK money laundering regulations, so firms are not reporting in two different currencies. 

 Electronic notices for licences:

• The law has been updated to confirm that OFSI and other authorities can send notices for licences electronically without needing consent for this approach. This reflects how communications already work and removes an outdated technical requirement. 

HM Treasury debt exception:

• A clarification that the exception for Treasury debt applies to all transfers of funds across the entire payment chain, including intermediaries. 

Updates to the prior obligations licensing ground:

• The prior obligations licensing ground has been broadened, giving OFSI greater flexibility to license legitimate pre-designation obligations in appropriate cases while maintaining safeguards against sanctions circumvention. 

FAQs updated

• FAQs 137-138 updated and FAQ 185 added.

Context

The National Cyber Security Centre has published an article outlining that using AI to find vulnerabilities can bring added security considerations.

Key points to note

• When using AI to improve security in an organisation, the mere act of finding a vulnerability does not automatically improve it.
• The best way to improve security is to maintain basic cyber security hygiene. Ensure patches are deployed immediately and ensure unauthorised access is prohibited. Understand the software being relied on, and know what IT is in the estate.
• AI might identify a number of vulnerabilities, these should be prioritised according to risk.
• Using AI isn’t risk free and firms should weigh up the security implications which might arise, such as leakage of information or providing access to the production environment.
• AI is a tool that attackers and defenders will use, it’s still necessary for firms to understand security – AI models will improve the skills of cyber security staff but won’t replace them.