Regulation Round Up – February 2025

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.

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.