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

Context

The FCA paused the handling of some motor finance complaints in January 2024 while it assessed whether there had been adequate disclosure of commissions between motor finance lenders and brokers.  The pause helped to prevent disorderly, inconsistent and inefficient outcomes for consumers and knock-on effects for firms and the market while the assessment took place.

The FCA is now lifting the pause on the handling of motor finance complaints on 31 May 2026. The timeframe enables the FCA to finalise and begin implementing any compensation scheme, while giving firms a reasonable period to prepare. The FCA says that ending the pause on 31 May 2026, rather than 31 July 2026 as originally consulted on, reflects its commitment to ensuring consumers receive fair and timely outcomes

Key points to note and next actions

• The FCA is consulting on a compensation scheme for customers who were treated unfairly.
• It is likely that the FCA will go ahead with a scheme.  Complaints that fall within the scheme will be dealt with under specific rules, including timeframes for them to be completed.
• The consultation is for a scheme of sufficient scope, so as to ensure the number of complaints falling out of the currently proposed scheme are low.
• In a Dear CEO letter (PDF) sent on 3 December, the FCA has reminded firms that they should be progressing complaints. This is to ensure firms are ready to start issuing final responses to complaints if they are not covered by any scheme.
• If the FCA proceeds with a scheme, it will consider how the rules interact with the end of the complaint handling pause, to avoid firms having to send final responses that would otherwise be dealt with in the scheme.
• The FCA intends its final rules to set out how firms should respond to complaints involving both scheme and non-scheme elements, recognising that it may be simpler and less confusing for consumers if firms send a final response to any scheme and non-scheme complaints at the same time.
• Final scheme rules are expected by March 2026.
• Leasing complaints are not in scope of the proposed compensation scheme and are, therefore, excluded from this further extension. Firms must start sending final responses to any motor leasing complaint from 5 December 2025 in line with normal complaint handling rules.
• Record retention: Firms will have to retain and preserve relevant records until 11 April 2031, supporting transparency and ongoing consumer protection in line with the proposed scheme.

Context

The FCA publishes Policy Statement PS25/19: Improving the Complaints Reporting process which confirms plans to streamline the way firms report complaints to them. These improvements aim to improve data quality and strengthen consumer protection across the sector.

Key points to note and next actions

• Five separate existing complaints returns will be replaced by a single consolidated return, which the FCA says will simplify reporting, reduce duplication, and support more consistent and comparable data collection. 
• Sarah Pritchard, deputy chief executive of the FCA said: ‘These improvements are a significant step forward in ensuring transparency and consistency across the sector. By streamlining returns and introducing clearer guidance, we’re making it easier for firms to provide high-quality complaints data while strengthening our ability to protect consumers, particularly those who are most vulnerable.’
• These changes reflect the FCA’s commitment to protecting consumers and being a smarter regulator, while reducing unnecessary burdens on firms. The first reporting period under the new process will run from 1 January to 30 June 2027.

Key changes to complaints reporting will include

Permission-based reporting

• Complaints reporting will be based on firms’ permissions, meaning firms will only need to complete the sections of the new return relevant to their regulated activities.

Removal of group reporting

• Firms will be required to submit complaints data at the individual legal entity level, increasing transparency and more accurate regulatory oversight.

Updated complaints taxonomy

• The FCA has updated the complaints taxonomy and expects this to improve how complaints are categorised and understood, reflecting modern products and services and aiming to reduce reliance on reporting complaints against broad categories such as ‘Other’.

Identifying customers as vulnerable when firms report complaints

Firms will be required to report whether complainants are in vulnerable circumstances using the following two data points:

• all complaints where the firm has identified the customer is in vulnerable circumstances, regardless of whether this was through customer disclosure or any other means, such as system inferred indicators.
• all complaints where the complaint relates to or was caused by the firm’s failure to consider or respond to the customer’s characteristic(s) of vulnerability, regardless of how any such characteristics were identified.

Fixed reporting periods

• All firms will now report complaints data on a fixed 6-monthly and calendar year basis, replacing the use of each firm’s Accounting Reference Date (ARD).
• Firms currently reporting annually, namely, Funeral Plan providers, CMCs, Payment Service providers and some consumer credit firms, will now report twice a year.
• This link can be used to access the full policy statement and updated guidance on the FCA’s website

Context

The FCA has published a webpage informing that the FCA are working with major firms to test AI in a safe place to better understand the potential benefits and risks. The AI Live Testing initiative is the first of its kind in the financial sector to help firms who are ready to use AI in UK financial markets. Participating firms receive tailored support from the FCA’s regulatory team and its technical partner Advai, to develop, assess and deploy safe and responsible AI.

Advai is a UK-based AI company specialising in automated testing, evaluation and assurance of AI systems, providing independent technical evidence so organisations can deploy AI safely and confidently at scale.

 Key points to note and next actions

• In September 2025, the FCA published a Feedback Statement on the potential benefits, opportunities and challenges raised by the FCAs proposal for AI Live Testing.
• AI Live Testing complements the FCA’s Supercharged Sandbox which helps firms who are in the discovery and experiment phase with AI. Applications for the second cohort for AI Live Testing will open in January 2026 and participating firms will be able to start testing in April.

Context

The FCA censures the Institute of Certified Bookkeepers (ICB) for serious failings in anti-money laundering supervision, which is the FCA’s first enforcement outcome against a professional body supervisor.

Key points to note and next actions

The ICB is a professional body supervisor responsible for overseeing the AML compliance of over 3,000 bookkeepers under the Money Laundering Regulations 2017. Between January 2022 and July 2023, ICB breached key AML regulations relating to its role as an AML supervisor, thereby increasing the risks of financial crime amongst members.

It failed to adopt an adequate risk-based approach to its supervisory functions and did not effectively monitor its members. The most serious breaches were caused or made worse by ICB’s decision to suspend all inspections – both onsite and virtual – for nine months.

Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said: ‘Anti-money laundering rules stop criminals from exploiting the financial system and help protect people, businesses and wider market trust. Strong AML supervision matters because it ensures these safeguards work in practice. This outcome demonstrates that the FCA is prepared to take enforcement action against professional body supervisors where their oversight of member organisations falls below the high standards we expect.’
 
The Government has recently announced planned reforms to make the FCA the Single Professional Services Supervisor, aiming to deliver a more effective approach to combatting illicit finance. These reforms will take time to implement. In the interim, OPBAS will continue to work with professional body supervisors to ensure compliance with AML regulations. For more information, you can read the Final Notice issued to ICB.

Context

The FCA’s access to cash regime was introduced to maintain reasonable provision of cash access services, with its rules becoming effective in September 2024. During the first year 121 banking hubs have opened, alongside a further 93 cash deposit services such as ATMs and Post Office counters.

The FCA’s rules aim to reasonably address the local cash needs of consumers and businesses, including ensuring businesses have reasonable access to deposit facilities and can obtain different denominations of cash to provide change for customers. This can help ensure retailers who do wish to accept cash remain able to deposit and withdraw cash using nearby services.

Key points to note and next actions

The FCA anticipates commencing a review of the access to cash regime towards the end of 2026, roughly 2 years after the rules took effect, and publishing the findings in Q2 2027. The FCA sees this timeframe as allowing sufficient time for the impacts of the policy to materialise. The review will contain both a qualitative and quantitative assessment of the regime, including in-depth engagement with stakeholders to ensure a range of views are considered.

While the exact scope and methodology has yet to be determined, the review is to examine both how the FCA’s policy is operating (e.g. compliance, firm response, and costs to firms) and its success in preventing significant gaps in cash access for consumers and businesses (e.g. supply-side impacts and changes in user perspectives). The review will assess the costs and benefits of the rules and if the approach to maintaining sustainable cash access services is proportionate and effective

Context

The ABI is reassuring people that insurers are on hand to support customers if they suffer flood damage. 

Key points to note and next actions

Signing up to flood alerts can help you prepare if flooding is expected. If you get a warning, you should: 

• Put a flood kit together that contains items such as your mobile phone and chargers, contact telephone numbers, any current medication, torch, battery, radio, insurance policy details, rubber gloves, wet wipes, hand cleaning gel, first aid kit and bottled water.    
• Move valuable, sentimental or essential items upstairs or to a high place and, if it is safe to do so, consider moving your car to an area less likely to flood.    
• Keep your pets safe and away from any flooding.    
• Fit any property level resilience measures where possible such as flood gates or air brick covers.    

If your property suffers any damage because of flooding you should:

• Contact your insurer as soon as possible. Most will have 24-hour emergency helplines.
• If necessary, arrange temporary emergency repairs to stop any damage getting worse, but speak to your insurer first. Keep any receipts, as these will form part of your claim.   
• If your home is uninhabitable while repairs are being carried out, any alternative temporary accommodation can be arranged in line with your policy.   
• If your home is flooded, ask your insurer if you are eligible for Build Back Better which can help to make your home more resilient to future flooding. 
• Commercial polices will cover damage to premises and stock in line with your policy. Business interruption cover (which may be included or purchased separately) will cover additional trading costs, such as hiring temporary alternative trading premises if necessary. 

Context

The National Cyber Security Centre has published an article with the latest figures from GCHQ’s National Cyber Security Centre (NCSC) and BT.

Almost one billion early-stage cyber-attacks and attempts to access scam websites have been blocked by a new government cyber service in less than a year.

Key points to note and next actions

Online content such as fake shops, phishing sites and malicious links, including from emails reported to the NCSC by the public, are being blocked automatically providing better protection at scale.  Individuals and organisations should remain alert to possible fraudulent or malicious websites.

Firms can visit the NCSC website for further guidance.