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

Context

As part of ongoing improvements to My FCA, and following the successful removal of RegData sign in at the end of last year, the FCA has now removed direct access to Connect and the Online Invoicing System.

Key points to note and next actions

• Firms do not need to take any action.  All existing RegData, Connect and Online Invoicing links and bookmarked pages will now automatically redirect to My FCA, where firms can access all systems from a single homepage without signing in again.
• One year on from launch, the FCA says that My FCA has proven to be a success. It is now used by all firms, providing a streamlined, effective way to manage regulatory tasks. Engagement continues to grow, feedback has been strong, and My FCA is now firmly embedded as a key part of firms’ regulatory journey.

Context

To help firms review and evolve their approach to being resilient, and to make sure they are continuing to comply with the FCA’s operational resilience rules, the FCA has published observations and insights from a review of firms’ self-assessments on how they are continuing to strengthen operational resilience under FCA rules and guidance.  The FCA has seen strong engagement and good progress across all areas of the operational resilience requirements.

Key points to note and next actions

The FCA has seen examples of good practice as well as areas where further improvement is needed, and it is engaging directly with firms in scope of its rules on these findings.  However, there is information in the observations that all firms could benefit from considering, even those not in scope of these rules.

• High-profile incidents and outages in have reinforced the need for strong resilience and its role in maintaining trust and stability in the sector.
• Boards play an important role in strengthening firms’ operational resilience; the self-assessment gives them the information they need to understand their firm’s approach, who is responsible for it, and the organisation’s ability to recover important business services within impact tolerance.
• The FCA encourages firms to continue to remediate individual firm-specific vulnerabilities and working collaboratively with industry groups.  The FCA published examples of effective practice we have observed in these areas with the PRA and Bank of England in 2025.
• Many firms demonstrate maturity in governance, but all firms should continue to focus on Board / most senior management engagement, robust frameworks, and evidence-based self-assessment for sector-wide improvement.
• The FCA sets out its good practice and areas for improvement findings under six headings:
  • Important business services and impact tolerances
  • Mapping resources
  • Scenario testing
  • Vulnerability management
  • Communications plans and strategy
  • Governance

Context

The FCA and PRA have confirmed the annual Management Expenses Levy Limit (MELL) for the Financial Services Compensation Scheme (FSCS) for the financial year 2026/27 will be £112,972,954.

Key points to note and next actions

• The MELL covers the FSCS’s ongoing operating costs and includes the FSCS’s IT, staff, legal and outsourced and internal claims handling costs. It does not include compensation costs, which are levied separately and decided by the FSCS.
• The FCA and PRA are required to set a limit on the total management expenses that the FSCS can levy financial services firms. Setting the right MELL makes sure the FSCS has enough funding to carry out its functions.
• For more detail on how the MELL is calculated and the FSCS unlevied reserve, see the Policy statement and the FSCS January 2026 budget update

Context

The FCA has published Handbook Notice 139, confirming a number of Handbook changes and when they will come into force.  The more relevant items are set out below.

Key points to note and next actions

• A new DISP 3.1A sets out the details of the new FOS ‘registered’ and ‘pre-registered’ stages.
• The grounds for dismissal of a complaint by FOS have been re-drawn.
• Redress reforms requirements in SUP, DISP and COMP seek to clarify when firms should report emerging issues to the FCA and to improve the operational efficiency of FOS and the FSCS by streamlining processes and reducing the operational costs ultimately met by firms.
• Complaints reporting changes extend the requirement to provide vulnerable customer complaints data to all firms reporting complaints using the new consolidated complaints return from 1^st January 2027.
• Changes to the FEES Sourcebook amend the due dates for ‘on account’ payments and retain the current relevant business definition in FEES 5, which means that only income from consumers will continue to be reported in the FOS fees element of Section J of the RMAR (RMA-J).
• Reducing the administrative fee for late regulatory returns.
• Removing REP021a, b and d and reducing the FIN073 reporting frequency.

Context

The FCA has announced, as part of its Regulation Round-Up communication, that the award limit for complaints referred to FOS will increase from 1^st April 2026.

Key points to note and next actions

The award limits will increase to:

• £205,000 (from £200,000 in 2025) for complaints about acts or omissions that took place before 1^st April 2019.
• £455,000 (from £445,000 in 2025) for complaints about acts or omissions that took place on or after 1^st April 2019.

The figures are automatically adjusted annually, in line with the Consumer Prices Index (CPI).  The next adjustment will take place from 1 April 2027. See Policy Statement  PS19/8 for more information and the FCA’s rules for increasing the Financial Ombudsman’s award limits.

Context

The FCA has set out plans for using AI to speed up authorisations, testing new tools to identify key risks earlier, with people remaining at the heart of decision making.

Key points to note and next actions

The new authorisation tool is being developed internally and will be integrated into existing FCA systems, forming part of the FCA’s annual work programme 2026/27, which lays out the FCA’s ambition to be a smarter, more data-driven regulator. The FCA will also use generative AI to modernise regulation, streamline supervision and improve firms’ experience, by reducing unnecessary administrative burdens. The programme outlines initiatives to simplify processes and help firms operate more efficiently, while ensuring high standards are maintained across the financial sector:

• Integrating AI into regulatory workflows – enabling the FCA to detect harm more effectively and speed up regulatory decision-making. 
• Using generative AI to review documents received from firms – supporting faster decisions. Following successful testing, it will be rolled out across authorisations and supervision. 
• Using a new sandbox environment to test automated data feeds between the FCA and firms – reducing manual effort and improving the timeliness and reliability of intelligence.
• Investing in smarter case handling – using analytics and digital tools to quickly identify the greatest sources of harm and triage intelligence more efficiently.
• Expanding the Supercharged Sandbox – opening to a new cohort of firms and giving them access to high-quality synthetic data so innovative, AI-driven financial products can be safely tested. 
• Reducing burdens on firms – removing 3 more regular data returns, reducing the frequency of another, and moving more regulatory tasks onto My FCA, so firms can manage everything in one place. 
• Improving firms’ experience of regulation – with faster authorisation timelines, simplified digital forms, and a new scorecard to better understand and respond to what firms need. 
• The FCA also continues to support economic growth and help consumers navigate their financial lives and fight financial crime by: Unlocking capital investment and liquidity across UK markets; expanding its overseas presence – to the United Arab Emirates, China and India; beginning regulation of deferred payment credit (Buy Now Pay Later) and by creating a single, end-to-end, intelligence-led service – to spot and stop the highest harm financial promotions faster, at lower cost and in a more consistent way.

The FCA has also published a consultation on our fees and levies for the year ahead and its perimeter report for 2026/27, setting out the most significant issues at the edge of its remit, including where legislative change may be needed to better protect consumers, markets and support sustained economic growth.  

Context

The FCA has published on LinkedIn its March Insights, looking at one of its four strategic priorities – becoming a smarter regulator. 

Key points to note and next actions

The article comments on:

• The next phase of more effective regulation – referencing the FCA’s recently published annual work programme and focusing on using data and technology, including exploring the use of AI to support faster authorisations, testing new tools to spot key risks sooner, and modernising regulation.
• Making authorisation clearer and more proportionate – introducing faster authorisation targets, supported by clearer metrics and greater transparency.
• Finding out what firms think about the FCA’s authorisation process – outlining how clear communication and early engagement helped a firm’s authorisation application progress smoothly.
• Presenting the FCA’s regulatory priorities – in its new suite of Regulatory Priorities Reports.
• How the FCA communicates numbers – seeking to communicate in a way which gives greater clarity and strengthening the way it presents data by becoming Plain Numbers practitioners.

Context

The FCA and the ICO have issued a joint statement on regulatory expectations regarding firms’ approaches to vulnerability-related data.  The statement aims to help firms understand and apply the FCA’s expectations for delivering good outcomes for retail consumers in vulnerable circumstances, in line with the Consumer Duty, while also maintaining confidence in the lawful, fair and responsible use of personal information in line with the ICO’s expectations.

Key points to note and next actions

The statement sets out FCA expectations, data protection considerations, and examples in relation to:

• Supporting consumers in vulnerable circumstances (including data protection principles, lawful bases, special category data, data protection impact assessments (DPIAs), and automated decision making and profiling.
• Sharing data across distribution chains.
• Monitoring customer outcomes.

Context

The FCA has announced a new joint regulators taskforce to crack down on poor practice in motor finance claims, which will tackle poor handling of motor finance claims by some claims management companies (CMCs) and law firms  The FCA, Solicitors Regulation Authority (SRA), Information Commissioner’s Office (ICO) and Advertising Standards Authority (ASA) have agreed to join up their efforts.

Key points to note and next actions

• The announcement comes as the FCA has set out its final compensation scheme for motor finance customers.
• The regulators will step up efforts to share intelligence and continue to take co-ordinated and targeted actions using the full extent of their powers to mitigate harm to consumers.
• The taskforce will take swift action to tackle issues with unsolicited and misleading advertising, meritless claims, multiple representation, and unfair exit fees.
• The scheme will be free, and people do not need to use a CMC or law firm. Should they decide to do so, it is important that they can trust CMCs and law firms to act in their best interests.
• The taskforce wants consumers to have confidence in the system. It is a great example of how regulators can use collective expertise and powers to not only take action, but also to improve consumers’ awareness of the standards they can expect from law firms and CMCs.
• It is vital that ads promoting motor finance redress services are clear about the commitments and costs of engaging with a CMC or law firm. The ASA will take robust and proactive action to tackle misleading advertising of such services, working in partnership with other regulators as part of this taskforce.
• The law is long-standing, clear and simple – do not send unsolicited direct marketing without consent. The ICO provides advice and support to help companies to comply, but where it sees unlawful practices causing harm to the public, it will take action to the fullest extent.
• The web page includes advice for consumers.

Context

The PRA and the FCA have launched a new Skilled Persons panel effective from 1 April 2026, which will be in place for four years until 31 March 2030. This panel supports the commissioning of Skilled Person Reports under section 166 of the Financial Services & Markets Act 2000, serving as a key supervisory tool in relation to regulated firms and their groups.

Key points to note and next actions

A Skilled Persons review is one of the regulatory tools we can employ under FSMA 2000 (as amended by the 2012 Act).

Under FSMA, there are two types of Skilled Persons reviews that we can commission:

• s166 Reports by Skilled Persons; and
• s166A Appointment of Skilled Persons to collect and update information.

Context

FOS Chief Operating Officer, Marc Harris, looks how the changes and re-shaping as a result of AI are impacting the complaints, questions and experiences that consumers bring to FOS.  AI is reshaping the world at remarkable speed; from the way people access services to the way businesses design and deliver them. In financial services this trend is no different.  FOS is sharing its early insights into how AI is influencing the consumer complaints landscape and how it is adapting to meet both the opportunities and challenges ahead.

Key points to note and next actions

As the UK’s dispute resolution service for financial services, FOS’ focus is to resolve complaints fairly and efficiently, while ensuring the system works for everyone, including the most vulnerable people.

The article comments on:

• Consumers’ use of AI is fundamentally changing the complaints we see
• Professional representatives and their use of AI
• AI’s growing role in financial firm’s operations
• How FOS is using AI with human judgement at the core
• A system wide challenge that requires sector-wide collaboration

The article introduces the FOS Business Support Hub and its AI Principles.

Context

FOS has published its Plans and Budget for the 2026/27 financial year, which sets out the priorities for the next 12 months.

Key points to note and next actions

• The FOS is currently undergoing the biggest transformation to its operations since inception 25 years ago. Working with the Financial Conduct Authority (FCA) and the government, the FOS is driving an ambitious programme of changes to allow better focus on its core purpose as a quick and informal alternative to the courts.
• Earlier this month, a new consultation (Modernising the Redress System – a joint consultation from the Financial Ombudsman and FCA) set out measures to update FOS processes and improve transparency for customers.
• The year ahead will see the FOS focus on delivering a service which is quicker, clearer and easier to use, with new digital tools to reduce friction in the customer journey and to allow caseworkers to direct their time and expertise where it is needed most. Following a period of significant demand, FOS case volumes are stabilising, with 199,000 new complaints expected to be received in 2026/27. This would be a decrease from nearly 306,000 in 2024/25, and from around 210,000 in 2025/26, due to fewer motor finance commission cases and fewer complaints from professional representatives.
• It is planned that 266,500 cases will be resolved over the course of the year – a mix of new cases and those already received. As a demand-led organisation, FOS case numbers and resolutions can fluctuate, so continuous improvement and leveraging core platform capabilities remain key priorities for the year ahead, as is the ability to efficiently scale up or down casework resources to enable resolution of complaints in a timely manner
• From 1 April, the compulsory levy will be £86m. Respondent firms will be charged £680 per case, and professional representatives will be charged £80 for cases they refer which are found in favour of the consumer they represent. For cases which are found in favour of the firm, professional representatives will pay £260 and the firm’s case fee will reduce to £500. These charges are unchanged from those proposed in the Plans and Budget consultation.

Context

The ICO is consulting on draft guidance about automated decision-making, including profiling. The updates to guidance follow the introduction of the Data (Use and Access) Act 2025. Responses will help the ICO provide any further clarity needed. It focuses on provisions specific to automated decision-making, not every data protection concept. This guidance is aimed at data protection officers, compliance professionals, and technical leads with oversight of an organisation’s use or procurement of ADM systems.

Key points to note and next actions

In due course, the ICO will also update the “in brief” guidance, which provides a shorter overview: Rights related to automated decision making including profiling, and guidance for the public: Your rights relating to decisions being made about you without human involvement.  

The ICO welcomes feedback and questions are split into the following sections:  

• Section 1: About you 
• Section 2: About your organisation 
• Section 3: Your general views on our draft guidance 
• Section 4: Your specific views on our draft guidance 
• Section 5: Your experience 
• Section 6: Your views on the draft impact assessment 
• Section 7: Your views on the costs and benefits of the draft guidance to your organisation   

You can respond to the consultation by completing the online survey, available through Citizen Space, or by sharing your submission to ai@ico.org.uk. The consultation will remain open until 23:59 (GMT) on 29 May 2026. Responses received after this deadline may not be considered.

Context

EIOPA has published a report, which is the third to be published by EIOPA, assessing developments in the EU insurance distribution market and evaluating the impact of the IDD on consumers, distributors and supervisors during 2024–2025.  Alongside the report it has also published associated survey results and a brief summary.

Key points to note and next actions

The report draws on two surveys conducted with national competent authorities, as well as feedback gathered from a public event in April 2025 and EIOPA’s Insurance and Reinsurance Stakeholder Group (IRSG).  The report is broken down into the following sections:

• Changes in the EU Insurance Distribution Market
• Impact of the Regulatory Framework, which includes:
  • Level of professionalism and competence of insurance distributors
  • Digitalisation and growth of new distribution models
  • Impact of the IDD on the quality of advice and selling methods
• Impact on the Supervisory Framework, which includes
  • Supervisory concerns arising from the application of conduct of business requirements in relation to:
    • Product oversight and governance
    • Conflicts of interest and remuneration
    • Cross-selling of financial products

Context

New data published by the CII reveals that consumers believe insurers are responding to their concerns about loyalty.  Overall consumer satisfaction with insurers rose to 86% in Q1 2026, returning to its highest recorded level since the survey began in 2019. Consumers said insurers had performed better across all nine survey themes for the second consecutive survey, with greater improvements in the areas of ‘loyalty’ (getting a fair deal), ‘confidence’, and ‘ease of doing business’. While consumers still consider ‘loyalty’ as the area with greatest opportunity to improve, the figure is now at an historical low, having fallen for three consecutive waves.

Key points to note

The key actions consumers said firms could still take to build trust included:

• Offering discounts for customers who stay with the same company.
  • Ensuring premiums do not increase simply because a customer is no longer new.
  • Handling complaints in a professional and fair manner.
  • Recognising customer loyalty at renewal after a claim.
  • Explain policies clearly.

The key actions SMEs said firms could take to build trust included:

• Ensuring SMEs know what their policy both covers and excludes.
  • Offering discounts for SMEs who stay with the same company.
  • Providing effective assistance and advice during a claim.
  • Explaining policies clearly.
  • Assessing SMEs’ risk individually, rather than using generic assumptions.