Regulatory Round-Up: Innovation, Fair Value and Recent FCA Actions

Rachel MacRae

Welcome back to the B-Compliant Podcast. Today, Vicky and I are doing a bit of a regulatory round-up, pulling together some of the latest messages from the FCA, the FOS and the Bank of England.

Unknown Speaker

Yes, there’s quite a lot packed in. We’ve got Sarah Pritchard’s recent speech at the ABI Annual Conference, the FCA’s blog on fair value, the action taken against Advantage Wealth Management, the latest FOS complaint figures, and the Bank of England’s latest base rate decision.

Rachel MacRae

So, let’s start with that ABI speech. Sarah Pritchard, the FCA’s Deputy Chief Executive, really reinforced the vital role that insurance plays, both in consumers’ financial resilience and in the wider UK economy.

Unknown Speaker

She also urged the insurance sector to confidently embrace innovation, but with consumer trust right at the centre. That balance between innovation and trust came through very strongly.

Rachel MacRae

And she flagged the growing support the FCA says it’s offering firms. So we’ve got the AI Lab, the various Sandboxes, and the Scale-Up Unit, all positioned as tools that insurers can and should be making greater use of.

Unknown Speaker

Exactly. The message was really, these tools are there, so don’t be shy about using them. But, at the same time, she acknowledged that consumer trust is still low, which is a big issue for the sector.

Rachel MacRae

To respond to that, she highlighted the importance of clearer communication with customers, delivering fair value, and achieving strong Consumer Duty outcomes. She tied that to recent FCA actions that have delivered significant redress and improved standards.

Unknown Speaker

Looking ahead, she set out some clear areas of continued focus for the regulator: claims handling, fair value, the protection gap, and clearer expectations for wholesale markets. And she linked all of that to a more predictable, outcomes-based supervisory approach.

Rachel MacRae

Her overarching message to the industry was pretty clear: innovate responsibly, bring consumers with you, and engage early with the regulator to help shape a regulatory environment that supports both growth and good outcomes.

Unknown Speaker

Alongside that, we’ve now got the FCA blog on what “fair value” means in practice, and that really builds on the Consumer Duty themes we’ve just mentioned.

Rachel MacRae

The FCA is challenging firms to demonstrate that customers are paying a reasonable price in relation to the benefits they receive. So, it’s not just about the headline price, it’s that relationship between price and benefit that they want firms to evidence.

Unknown Speaker

The blog points to recent supervisory work in a few specific areas: cash savings, investment platforms and premium finance. And the FCA is saying that work has already delivered meaningful improvements for consumers.

Rachel MacRae

For example, in cash savings, firms have improved savings rates, and in other areas, we’ve seen reductions in excessive APRs. So those are real, observable changes that the FCA is linking directly to its fair value focus.

Unknown Speaker

In the premium finance market alone, the FCA says that this enhanced scrutiny has contributed to estimated annual consumer savings of £157 million. That’s a significant number and it shows the scale of change they’re expecting.

Rachel MacRae

The regulator is very clear that all firms should be able to evidence fair value within their offerings and make changes where needed. And they’re not ruling out further intervention if firms don’t step up.

Unknown Speaker

So the consistent message is that firms must ensure their customers are getting a fair deal, and they must be able to show that to the FCA if asked.

Rachel MacRae

Let’s move on to the FCA’s action against Advantage Wealth Management, or AWM. This is a very concrete example of the regulator stepping in where it has serious concerns.

Unknown Speaker

Yes, the FCA has imposed restrictions on AWM that prevent the firm from conducting any regulated activities or disposing of assets without prior written consent from the regulator.

Rachel MacRae

As a result, AWM can no longer act as an independent financial adviser. And customers have been encouraged to seek alternative advice, which is a very strong signal about the seriousness of the situation.

Unknown Speaker

The FCA’s concerns here cover several areas: the movement of several clients’ investments into cash, questions over the firm’s financial resources, and limited cooperation with the regulator.

Rachel MacRae

So you’ve got client investments being moved into cash, doubts about the robustness of the firm’s financial position, and then, on top of that, a lack of full cooperation with the FCA. Taken together, those issues prompted the regulator to act.

Unknown Speaker

The case is being highlighted as offering important lessons across the sector. The first is that Consumer Duty obligations must remain front-and-centre in how firms operate.

Rachel MacRae

Second, full cooperation with the FCA is essential. When the regulator comes calling, firms need to be transparent and responsive, because any perception of limited cooperation will only add to the concerns.

Unknown Speaker

And third, the case underlines the need for robust systems and controls, so that firms can demonstrate their operations are sound, transparent and well-governed.

Rachel MacRae

The text makes the point that ensuring these foundations are in place now leaves firms far better prepared should the FCA ever come calling in the future.

Unknown Speaker

So, bringing that together, AWM is a reminder of what can happen when those fundamentals aren’t where they should be, and why other firms need to pay close attention to the themes the FCA is drawing out.

Rachel MacRae

Let’s turn to the complaints landscape next. The Financial Ombudsman Service has issued a press release confirming that complaint volumes have now returned to levels last seen in 2023/24.

Unknown Speaker

According to the FOS, more consumers are choosing to engage with the service directly, and professional representatives are submitting better-prepared complaints. That’s helping to streamline the investigation process.

Rachel MacRae

Between October and December 2025, the FOS received 47,300 new complaints. That’s a significant reduction from the 68,400 recorded in the same quarter the previous year.

Unknown Speaker

And those latest figures are consistent with the steady volumes that have been seen over the previous six months, so it’s not just a one-off change in the data.

Rachel MacRae

The FOS attributes this shift to a few different factors. One is the FCA’s complaint-handling pause and the forthcoming redress scheme for motor finance commission cases.

Unknown Speaker

Another factor is the introduction of charges for professional representatives. Together, these changes seem to be influencing how and when complaints are brought.

Rachel MacRae

Encouragingly, the service is seeing fewer abandoned cases and a notable fall in irresponsible lending complaints, which is a specific trend they’ve pointed out.

Unknown Speaker

The FOS has also emphasised that it is working closely with HM Treasury and the FCA to ensure the future redress framework remains quick, informal and high-quality.

Rachel MacRae

The aim there is to give firms and advisers continued confidence in a fair, modernised dispute-resolution system, which is an important underpin for how complaints are handled across the market.

Unknown Speaker

Finally, we’ve got the Bank of England’s latest decision on the base rate. The Bank has kept the rate unchanged at 3.75% following its first Monetary Policy Committee meeting of 2026.

Rachel MacRae

It was a close decision, with members voting five to four in favour of holding rates, after ending 2025 with a 0.25% cut.

Unknown Speaker

The MPC highlighted that its discussions centred on the near-term inflation outlook, stressing the importance of inflation not only returning to the 2% target, but remaining sustainably at that level.

Rachel MacRae

While headline inflation has eased, largely due to one-off factors, committee members expressed differing views on whether this decline is sufficient to address the remaining risks of persistent underlying inflationary pressures.

Unknown Speaker

So, putting that together, we’ve got an interest rate that’s being held, a close vote, and a continued focus on the balance between easing inflation and underlying risks.

Rachel MacRae

And when you stand back from all of this, you can see the themes: the FCA pushing on innovation, fair value and Consumer Duty, the AWM case highlighting systems, controls and cooperation, the FOS working to keep the redress framework quick and high-quality, and the Bank of England carefully watching inflation as it holds the base rate.

Unknown Speaker

That’s a good place to leave our round-up for now. There’s plenty for firms and advisers to reflect on across all of these developments.

Rachel MacRae

Thanks for listening to this episode of the B-Compliant Podcast. We’ll be back with more updates as the regulatory landscape continues to evolve.

Unknown Speaker

Bye for now, and we’ll speak to you next time.