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

Context

The FCA has shared findings and has highlighted good and poor practice to help firms decide whether they are meeting existing risk assessment requirements. In 2025, the FCA carried out a multi-firm review focusing on business-wide risk assessment (BWRA) and customer risk assessment (CRA) processes. Key findings centred around how firms: identify, understand and assess risk, appropriately mitigate risk and effectively manage risk.  The FCA evaluated firms controls against

• Money Laundering Regulations 2017
• Financial Crime Guide (FCG)
• Senior Management Arrangements, Systems and Controls (SYSC)
• Joint Money Laundering Steering Group (JMLSG) guidance
• Financial Action Task Force (FATF) guidance

Key points to note and next actions

• The FCA found that most firms reviewed have a BWRA, but few are identifying relevant risks and tailoring the BWRA to the specific business. Several consider qualitative and quantitative data to assess and score inherent risks, mitigating controls and residual risk.
• Larger firms were seen to be integrating risk assessment activities into business functions and forming aggregated views across the firm.
• The FCA is concerned that some firms could not explain sufficiently how they are managing and mitigating identified risks.
• Some firms have used sub-factors and weightings to tailor their CRA process to the business and specific risks they face.
• The FCA is encouraged that some firms can show how risk appetite, BWRA and CRA processes work together to identify and assess risk.

Examples of good practice included comprehensive risk assessments; annual detailed review; tailored assessments; plan for compliance alongside growth; risk assessments feeding into firms work; tracking actions to reduce risk; risks considered throughout the business; senior oversight and challenge; continuity plans; clear, consistent methods to assess risk; regular review and joined up assessments.

Examples of poor practice were lack of detail; missing quantitative analysis; unclear processes; lack of evidence; growth outpaces risk assessment; lack of records; rapid expansion; lack of evidence of senior oversight; narrow focus; lack of testing and static approach to assessment.

The FCA expects firms to already be complying with existing requirements, specifically, to understand the risks your business is exposed to and to have robust financial crime systems and controls to manage and mitigate those risks.

Firms are encouraged to consider the FCA’s findings and suggestions within the context of their firm and continue to review their risk-based approach to systems and controls. Where weaknesses have been identified, the FCA is working with firms to make improvements. Firms will continue to be monitored through the FCA’s supervisory work to drive improvements and reduce risk across the industry.

Context

According to the (ABI) latest Motor Insurance Premium Tracker, motor insurance premiums continue to fall in 2025.  Between July and September, the average premium stood at £551, which is £13 lower than the previous quarter.

Key points to note and next actions

• Motor premiums dropped £16 between April and June and fell £42 at the start of the year, marking a consistent downward trend across all three quarters. When looking at the yearly picture, premiums in Q3 2025 were £56 lower than the same period in 2024. Adjusted for inflation, the real-terms decrease is even more substantial, totalling £79.
• The ABI’s Motor Insurance Premium Tracker is the most comprehensive in the UK, analysing nearly 28 million policies sold a year. It’s also the only collection that is based on the price customers pay for their cover rather than what they are quoted (which typically delivers higher averages).
• Repair costs accounted for 64% of the total claims figure, totalling £1.9 billion as the complexity and cost of fixing modern vehicles remains high.
• The cost of theft-related claims totalled £142 million in Q3, which serves as a reminder that tackling this challenge must remain a priority for manufacturers, insurers, and government.  

Context 

The ABI has called for cyber insurance to become a part of every organisation’s modern risk management strategy, as its latest figures show £197 million was paid out to help businesses recover from cyber incidents in 2024. 

Jonathan Fong, Head of General Insurance Policy at the ABI, said “Cyber insurance is more than just a financial safety net. The right policy not only supports businesses in the aftermath of an incident but can also help prevent attacks through access to expert advice, threat monitoring, and incident response planning. With cyber threats continuing to grow in scale and sophistication, it needs to be a critical component of every organisation’s modern risk management strategy.”

Key points to note and next actions

The ABI believes Cyber Insurance is proving to be indispensable in today’s digital economy, protecting businesses from costly breaches, ransomware, and email compromise while actively helping them prevent attacks and boost resilience.

With cyber threats escalating, demand for protection surged in 2024. 17% more policies were taken out than the previous year, presenting clear evidence that UK businesses are prioritising protection against evolving digital risks.

Context

In the November 2025 edition of Outlook the FSCS shares an update on compensation figures for this financial year, as well as an early view of the levy forecast for 2026/27.

Key points to note and next actions

Progress in 2025

The FSCS has completed the transition of its claims service, bringing the majority of claims management and all customer call-handling in-house. This shift is focused on enhancing customer experience and boosting productivity. It’s also helping build internal expertise across the wide range of claims it handles.  These changes are already delivering results, e.g. time spent chasing third parties for critical data needed to calculate potential losses for customers has been halved.

Knowing FSCS can act fast when a financial firm fails gives people the confidence to invest in financial products and services. This is why the FSCS is investing in being prepared, streamlining claims handling, speeding up deposit payouts through digital payments, and upgrading its insurance claims systems.

Latest forecasts for 2025/26

The 2025/26 levy remains as forecast in May 2025 at £356m and additional levies for firms are not anticipated.

The FSCS expects to pay slightly less in compensation over the year than anticipated in May, a decrease of 5% to £315m (from £332m). This is mainly due to a change in the types of claims it expects to pay out for customers.

Maximising recoveries is also a critical part of its role and efforts in this area continue to gain momentum, with close to £40m anticipated by the end of 2025/26.

An initial look at 2026/27

The FSCS early forecast of the total levy in 2026/27 is £342m, which represents a small decrease on 2025/26. This is based on a forecast of £294m in compensation costs for 2026/27.

These early expectations for 2026/27 reflect the changing claims environment. Lower compensation costs are currently forecast in the Investment Provision class, mainly driven by fewer claims against SIPP operators. A higher opening balance in this class is also anticipated as the FSCS carries forward surpluses from 2025/26.

In early 2026 the FSCS will publish an update to its Budget. This will provide full details of management expenses for 2026/27. This forms part of the overall levy and is jointly consulted on by the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA). The FSCS May 2026 Outlook will provide an update to the forecasts and confirm the levy for 2026/27.

Context

The FCA has published a Final Notice in respect of the Dental Insurance Partnership Ltd, cancelling the firm’s Part 4A permission to carry on regulated activities.

Key points to note and next actions

The reasons for the cancellation are that it appears to the FCA that the firm is failing to satisfy the Suitability Threshold Condition in that the firm is not a fit and proper person to conduct regulated activities, having regard to all the circumstances. Specifically, the firm failed to pay overdue regulatory fees and levies owed to the FCA despite repeated requests.

The cancellation has been imposed in order to advance the FCA’s consumer protection and integrity objectives.

Context

Charles Taylor Assistance, which is a provider of global repatriation, medical assistance and travel insurance claims management, reports a growing number of travel insurance customers are setting off abroad with multiple health conditions, which is increasing the demand for and complexity of medical repatriations.

Key points to note and next actions

The demand for medical repatriations has almost doubled in the last year, which has been attributed to more people travelling with undiagnosed medical conditions.  The pressure on hospital beds in the UK and mainland Europe is adding to repatriation complexities, with more sick policyholders being discharged from European hospitals for ongoing medical treatment in the UK, as soon as they are stable enough to fly.

Dr Lynn Gordon, chief medical officer at Charles Taylor Assistance, comments: “We’re seeing a sicker demographic of travellers, with more older people travelling, often to destinations with limited medical facilities. The knock-on effect of NHS waiting times means more people are travelling with unstable conditions whilst waiting for health problems to be diagnosed. In this context, it’s more important than ever for repatriation providers to offer joined up medical and logistical expertise to overcome repatriation challenges that can range from managing complex medical conditions in the air, to securing hard-to-find hospital beds in the UK. The right training, staff and equipment enable repatriation risks to be mitigated and every stage of a repatriation prepared for.”