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:
- A significant shift in inheritance tax (IHT) liability on pensions
- The FCA’s evolving position on AI and technology
- 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.
