Regulation

If the FCA’s July activity is anything to go by, the regulatory tide is gaining pace-and advisers need to be ready to swim with it, not against it.

This month’s roundup focuses on three things we think every financial planning firm should be across:

1. A significant shift in inheritance tax (IHT) liability on pensions
2. The FCA’s evolving position on AI and technology
3. A faster lane for firm authorisations-and what it signals

Let’s break them down.

🪦 IHT and Pensions: The Silent Risk for Personal Representatives

HMRC’s recent update could fly under the radar for many firms-but it shouldn’t.

From April 2027, personal representatives of estates will become liable for reporting and paying IHT on unused pension funds.

👉 The crux: pension scheme administrators are no longer expected to be liable for reporting and paying IHT on pensions. Instead, the burden of reporting and paying IHT will fall on the personal representatives.

This presents a new layer of complexity for those dealing with estates, especially in cases where:

• There are delays in processing or distributing pension funds

• The value of the pension is high and falls outside the scope of spousal exemption

• There’s poor clarity around nomination or expression of wishes

📌 Why it matters for advisers and paraplanners:

• Estate planning conversations now need to address the practicalitiesof pension death benefits, not just the theory.

• It’s worth reviewing how nomination forms and client expectations are discussed during annual reviews.

• Firms may want to flag this to professional connections (e.g., solicitors, accountants) to help ensure joined-up planning.

📖 Read the full FTAdviser article

🤖 FCA on AI: Promise, But with Caution Tape

At a recent speech hosted by Innovate Finance, the FCA’s Jessica Rusu outlined how the regulator views the rise of AI and large language models (LLMs) like ChatGPT.

What stood out was the tone: positive, but pragmatic.

The FCA recognises that AI has the potential to revolutionise:

• Advice delivery and suitability

• Client communications

• Back-office efficiency

But it also sees red flags if AI is deployed without proper controls.

🎯 Takeaways for firms:

• If you’re trialling or adopting AI tools, document the logic behind outputs.

• Make it clear who is responsible for sign-off.

• Ensure any client-facing outputs remain understandable to a non-specialist reader.

📖 Read the FCA’s full AI speech here

🏁 Speeding Up FCA Authorisations: A Welcome Signal

Finally, the FCA has announced a commitment to faster authorisation timeframes, with some decisions now expected in as little as 2 months.

This is more than a process tweak-it reflects a wider regulatory posture. The FCA is trying to:

• Support new entrants and innovation

• Streamline the bottleneck that’s historically slowed down firm launches

📌 Implications for existing firms:

• If you’re considering new permissions or structural changes, the window may now be less painful.

📖 FCA announcement on authorisation acceleration

👀 What This Signals: The Regulator is Moving Faster Than You Think

The common thread across all three updates?

Timeliness.

• Personal reps being liable? Linked to delays.

• AI’s promise? Must be matched by real-time explainability.

• Authorisations? Faster, but not lighter touch.

For compliance leads and operations managers, the takeaway is clear: regulatory expectation is shifting from checklists after the fact to structured control in the moment.

Whether it’s death benefit planning or AI adoption, firms must be able to show:

• Clear rationale

• Pre-emptive governance

• Evidence of oversight

Final Thought

None of this is about causing panic. But it is about being proactive-in your conversations, your processes, and your oversight.

We’re working with firms every day to help structure advice delivery in a way that stands up to this new pace of scrutiny.

Got questions? Just reach out – no pitch, just people who get financial advice.

Clear, practical insights for regulated advice teams, every month.

This month’s edition covers important updates on tax-free cash protection, drawdown timing, AI in the advice process, and a global clampdown on dodgy online promotions.

Whether you’re client-facing or behind-the-scenes, if you’re involved in shaping, delivering or supporting advice –  this is for you.

Let’s dive in 👇

🧮 Drawdown: A Tax Point You Might Be Missing

HMRC has updated its guidance on when a drawdown pension is formally “brought into payment.” And it’s earlier than many assume.

According to their revised manual, a drawdown is triggered the moment:

• The fund is designated for drawdown, and
• Any payment is made – even tax-free cash.

This has implications for how benefits are reported and can affect death benefit tax rules.

What to do: Review how your firm records and describes drawdown commencement. Ensure client documentation and internal systems reflect HMRC’s stance.

📖 HMRC PTM062701

💰 Tax-Free Cash Protections Are Changing – Time to Act

A heads-up if you’re advising clients with scheme-specific tax-free cash protections.

From 6 April 2025, new rules mean post-commencement transfers may no longer preserve these entitlements – especially where the receiving scheme doesn’t mirror the protection.

Why this matters: Protected lump sums can be lost, and that could have a huge financial impact.

Next step: Identify affected clients now. If a transfer is on the horizon, this could be the last window to preserve higher tax-free cash allowances.

📖 Discussion via Paraplanners Assembly

🤖 AI in Advice: FCA Launches Sandbox in Partnership with NVIDIA

The FCA has teamed up with NVIDIA to support firms testing AI in a secure regulatory environment.

Use cases include:

• Natural language tools for report writing
• Automated reviews of client files
• Real-time suitability checks and more

What this means: AI is moving fast — and the regulator is watching. Advice firms need to balance innovation with documentation, oversight, and client understanding.

Forward-thinking teams should keep tabs on this sandbox — it could shape the tools you’re using next year.

📖 FCA & NVIDIA Sandbox Launch

📱 Finfluencers Beware: FCA Targets Rogue Promotions

The FCA has taken the lead in an international campaign to crack down on illegal financial promotions online — particularly those using social media to skirt regulation.

Their latest sweep targeted influencers marketing investments without FCA authorisation, often on TikTok and Instagram.

If your firm creates content — or if individual advisers post online — this is a good time to refresh your approach. Disclosure, balance, and clarity aren’t optional.

📖 FCA Press Release

💡 Need Extra Capacity or Technical Firepower?

We Complement supports advice teams across the UK with high-quality report writing, technical analysis, and regulatory alignment. We work alongside planners, compliance teams, and business leaders to make sure the advice process runs smoothly – and nothing regulatory falls through the cracks.

If you’re working through complex drawdown, planning for April 2025 changes, or trying to future-proof your templates – we’re here to help.

For Financial Planners and Paraplanners, by Paraplanners

Welcome to the June edition of Regulation Round-Up — your friendly and practical digest of key FCA updates and industry news that matter to your daily work. We know the regulatory landscape can shift quickly, so we’re here to help you stay informed and confident in your advice process.

💚 Responsible Investing: Still a Priority for Clients

A recent article in Professional Paraplanner highlighted findings from the FCA showing that clients continue to value responsible investment options, despite market volatility and economic pressures.

According to the FCA’s research, a significant proportion of advised clients are not only aware of responsible or sustainable investments, but many are actively interested in them. That’s an important reminder to us as paraplanners and advisers: even when regulatory focus may be shifting elsewhere, clients still care deeply about how their money is invested.

Practical tip: Make sure you’re capturing client ESG preferences properly in fact-finds and suitability reports. If your templates haven’t been reviewed since Consumer Duty came in, now’s the time.

📖 Read the full article

📊 FCA Streamlines Complaints Reporting

The FCA has announced a simplification of the complaints data reporting requirements for firms. From 1 January 2026, firms will be required to submit complaints data only once a year, rather than biannually.

This is part of the regulator’s broader push to reduce red tape for smaller firms while retaining transparency and accountability. The FCA says it hopes the new regime will save time and resource for advice businesses.

Practical tip: If you’re involved in compliance support or MI reporting, take note of the transition date and ensure your internal calendars and procedures are updated in good time.

📖 FCA Announcement

🏦 FCA Responds to Government’s Pension Investment Review

The government recently concluded a major Pension Investment Review, which aims to encourage better outcomes for savers and a more productive use of capital. The FCA has now responded, committing to support the government’s aims through a range of regulatory initiatives.

Of note to advisers and paraplanners, the FCA confirmed it will:

• Continue to assess how workplace pensions and default funds align with retirement needs
• Ensure advice processes support suitable drawdown strategies
• Promote transparency in fund disclosures

Practical tip: While many of the changes relate to workplace pensions, these developments have the potential to filter into advice standards and client expectations. Keep an eye on updates, especially if your firm supports clients with legacy schemes or SIPPs.

📖 FCA Response

🤖 FCA Launches Live AI Testing Sandbox

Possibly the most forward-looking update this month: the FCA has announced the launch of a live AI testing environment, allowing firms to trial artificial intelligence tools in a safe and regulated space.

Dubbed a “digital sandbox for AI”, this initiative aims to strike the balance between innovation and consumer protection. It’s particularly relevant to compliance teams, fintech developers, and larger advice networks experimenting with machine learning tools.

Practical tip: AI might feel far removed from day-to-day paraplanning — but change is coming. Whether it’s document automation, suitability report generation, or risk profiling tools, expect AI to play a bigger role. Stay informed, and keep asking how these tools can support quality, not replace it.

📖 FCA AI Press Release

🔍 Other Noteworthy Updates

• Consumer Duty enforcement is ramping up — Early supervisory actions are being taken against firms failing to demonstrate fair value or communicate clearly. Now is a good time to review your client communications and file notes.
• Advice Guidance Boundary Review — The Treasury and FCA are working on proposals to close the advice gap. While changes are not immediate, the outcomes may impact how financial planners support lower-value clients.

📖 View FCA consultations and policy statements

✍️ We Complement Can Help

At We Complement, we know the pressure of staying compliant while delivering high-quality, client-centred advice. Our paraplanning service is built for modern financial planning teams — combining technical expertise, attention to detail, and a proactive understanding of regulatory change.

Whether you’re navigating ESG reporting, updating for Consumer Duty, or building capacity to scale, we’re here to support you.

👉 Want to learn more? Visit our website or drop us a message on LinkedIn. Let’s chat about how we can help your firm thrive.

That’s it for this month’s round-up — see you in July! If you found this helpful, why not forward it to a fellow planner or paraplanner?

Helping you stay one step ahead, with practical insights for paraplanners and advisers.

🤖 FCA to Launch Live AI Testing Service

The FCA has announced plans to launch a live AI testing service this September. The idea? To give firms a safe space to trial consumer- or market-facing AI tools, working alongside the regulator. If you’re considering using AI to enhance your advice process (think onboarding, risk profiling, or document automation), this could be a golden opportunity.

The service will run for 12 to 18 months and form part of the FCA’s wider tech-positive strategy. The FCA says it’s committed to supporting innovation while protecting consumers – and this live testing approach aims to help firms deploy AI responsibly, without fear of crossing regulatory lines.

Engagement Paper: Proposal for AI Live Testing

💡 Practical tip:If your firm is exploring AI tools, start by mapping out your use case. Is it aimed at improving client understanding? Speeding up suitability letter writing? Think about risks – bias, explainability, data protection – and how you’d address them. Even if you’re not planning to test with the FCA, being ‘AI-ready’ is likely to become a regulatory advantage.

🌍 Crypto & Digital Assets – Regulation Is Catching Up

The Government is moving closer to finalising legislation to regulate crypto assets – with licensing and registration of crypto firms on the horizon. The FCA has already taken down 900+ scam sites and issued 1,700 consumer alerts.

The new regime is expected to bring greater clarity and accountability. Key changes include:

• Firms must be registered with the FCA

• Enhanced enforcement powers

• Stronger investor protection mechanisms

Crypto ownership in the UK is now at 12% of adults, and the FCA is keen to protect this growing user base.

New cryptoasset rules to drive growth and protect consumers

💡 Practical tip for advisers: If your clients are asking about crypto, consider including it in your advice scope documentation. Outline where you do (or don’t) offer guidance – especially around scams and red flags. It can help manage expectations and demonstrate Consumer Duty compliance.

♻️ SDR Delay for Portfolio Managers

The FCA has decidednotto proceed (for now) with plans to extend Sustainability Disclosure Requirements (SDR) to portfolio managers. The feedback was broadly supportive, but the regulator says “now isn’t the right time.”

Instead, attention will turn to its upcoming review of Model Portfolio Services (MPS) – specifically looking at how firms are applying the Consumer Duty in practice.

FCA publishes update on extending the UK SDRs to portfolio managers

💡 Practical tip: Paraplanners can help ensure your investment proposition stands up to scrutiny by stress-testing model portfolios against client needs, preferences, and objectives. Keep an eye on cost/value assessments and be ready to evidence suitability.

📈 AI, Innovation & Becoming a Smarter Regulator

In a recent speech, the FCA’s Jessica Rusu explained how the regulator is embracing tech – not just to supervise better, but to reduce regulatory burdensfor firms. Think streamlined authorisation forms, fewer legacy data returns, and even a machine-readable Handbook.

The message is clear: innovation isn’t just allowed – it’s encouraged, provided it benefits consumers.

AI for growth – how the FCA can help

💡Practical tip:Innovation doesn’t always mean big budgets or bots. Small wins – like automating client communications or streamlining file reviews – can make a big impact. paraplanners and operations staff often spot these opportunities first.

What does all this mean for you?

We know it can feel like there’s a lot of change, but much of it is about enabling better advice, more efficient firms, and safer outcomes for clients. Whether you’re a paraplanner diving into tech tools or an adviser preparing for crypto conversations, this month’s updates offer useful prompts to reflect, review, and maybe even rethink.

At We Complement, we’re here to help you stay ahead – with clarity, confidence, and compliance.

📩 Want to talk about how these updates affect your CIP, CRP, or advice process? Let’s chat.hello@wecomplement.co.uk

Welcome to Regulation Round Up! This monthly briefing is your go-to resource for the latest regulatory updates in financial services. Each edition, we highlight key developments from HMRC, the FCA, and beyond—helping you navigate the evolving landscape with confidence and stay ahead of industry changes.

FCA Sets Out Proposals to Open Up the Bond Market

The FCA is currently consulting on plans to reduce costs and lower barriers for companies seeking to raise capital by issuing bonds. According to the FCA, “the aim is to encourage companies listed on stock exchanges to offer bonds in smaller sizes, thereby improving investment opportunities for wealth managers and retail investors. More flexible and affordable capital raising should support the growth of UK listed companies.”

The proposals are designed to enable companies to offer larger quantities of shares or bonds to a broad investor base outside of public markets through an authorised firm—much like the approach taken by crowdfunding platforms.

Read more on the FCA’s website

Treasury Committee Begins New Inquiry into the Use of AI in Financial Services

The Treasury Committee has opened a call for evidence regarding the use of artificial intelligence in banking, pensions, and other financial services. The inquiry aims to understand how AI can be utilised for innovation while ensuring robust consumer protection.

Key areas of focus include:

• How AI is currently being used in financial services.
• Opportunities for innovation and its impact on employment.
• Comparative analysis of the UK’s approach versus international methods.
• Consumer risks, especially for vulnerable groups, and the potential effects on financial stability and cyber security.

Find out more about the inquiry

Reminder: Deadlines for Lifetime Allowance Protections and Enhancements

Pensions Scheme Newsletter 166 (issued at the end of January) reminds us of the upcoming deadlines for lifetime allowance protections and enhancements. Please ensure that any clients affected by these changes submit their applications before the deadlines:

• Fixed Protection 2016 and Individual Protection 2016: Deadline: 5 April 2025
• International Enhancements for Overseas Individuals: Overseas individuals with accrual under a registered pension scheme, or transfers from a recognised overseas pension scheme, who wish to apply for international enhancements must do so by the earlier of the following: either the 31st of January following the end of the tax year, five years after the end of the tax year in which the accrual period ends or in which the recognised overseas scheme transfer took place, or the 5th of April 2025.
• Pension Credit Enhancements from Previously Crystallised Rights:Apply by the earliest of the following: Either the 31st of January following the end of the tax year, 5 years after the end of the tax year in which they legally became entitled to the pension credit, or the 5th of April 2025.

Read the full details on the GOV.UK website

Recent FOS Decisions

This month, we take the opportunity to review some recent decisions by the Financial Ombudsman Service (FOS). These decisions are invaluable for financial planners and paraplanners alike, offering insight into the considerations and rationale behind complaint resolutions.

FOS decisions can be really valuable reading for anyone who works in the financial planning world, and we recommend that all paraplanners, in particular, take a look at some recent decisions from time to time. You might find some of the decisions and the rationale given to be surprising. Regardless of whether you agree with the decisions made by the FOS, looking through their decisions gives a really interesting insight into the sort of things they look at when investigating a complaint. We’ve found this to be invaluable when writing suitability reports, and it helps you think critically about the processes and procedures that are in place where you work, and how they would be perceived by an external person.

DRN-5161884

This decision concerns a client’s complaint about the service received from his financial adviser, specifically challenging the perceived disproportionate charges relative to the level of service provided. The complaint was not upheld. The ombudsman’s rationale highlights the importance of something we mention often: evidencing the suitability of your advice. Without the adviser’s good record keeping, the outcome could have been different.

In a nutshell, the client said that he had incurred significant charges since the adviser has been managing his pension, and over that time there had been no fund switches made. He felt that the reviews were “tick box exercises” and he was not happy that his pension hadn’t achieved the same performance as the FTSE All Share Index.

As evidenced by the client file, the adviser had offered to re-assess the client’s risk profile on two occasions, had discussed the option of other investments, and had proposed discretionary management to the client to provide the level of active management he was seeking. The client declined these options.

Keeping your files well-organised, including maintaining records of conversations with clients, is key to making sure that you understand your client’s thoughts and needs, and adds an extra layer of protection for you. If you need help with making sure you have the right processes in place, get in touch.

Strengthen Your Practice with Robust Record-Keeping

Don’t let disorganised files and incomplete records jeopardise your professional standing. Maintaining comprehensive, up-to-date documentation is essential—not only for regulatory compliance but also for building trust and clarity with your clients. If you’re looking to refine your processes or need expert guidance on best practices, we’re here to help.

Get in Touch:

• Schedule a Free Consultation: Let’s discuss how to optimise your record-keeping and compliance processes.
• Tailored Support: Receive personalised advice to ensure your documentation practices meet the highest industry standards.
• Secure Your Future: Proactively safeguard your practice and enhance your client relationships by working with our experienced team.

Contact us today to find out how we can help you streamline your operations and protect your business.