Financial professionals

Written by Esme Watson

Key developments in 2024 

In March 2024 the FCA published the findings from its Thematic Review of retirement income advice, looking at the landscape c. 9 years post-pension freedoms against the backdrop of an ageing population. No fundamental problems were identified but the FCA set out some areas for improvement, from more consistent fact finding to considering the value being provided in respect of any ongoing services.

The most significant issue for FCA regulated professionals in 2024 was the ongoing vehicle finance saga, which culminated in a Court of Appeal judgment in October 2024. The Court of Appeal heard three joint cases and decided that the commissions paid in those cases were either secret or partially secret. Crucially, it was held that the broker in each case owed a fiduciary duty to the claimant, and informed consent to the commission payment could not be obtained in the absence of full disclosure of the amount of commission to be paid.   The individual remedy (generally being the commission plus interest) will generally be small but commentators estimate that the overall redress could be in the region of £30 billion. 

Permission to appeal to the Supreme Court has been sought and would be expected to be granted but in the meantime there is ahigh, and growing, number of claims and complaints (with c. 30,000 new FOS complaints made in the three months to April of this year).  

The issue is not specific to vehicle finance and, subject to any successful appeal, opens the door to scrutiny of commissions payments to brokers in general.

What to look out for in 2025 

There is plenty to look out for in 2025, in large part thanks to new Government's agenda. Rachel Reeves' Mansion House speech in November 2024 signposted an intention to reform and modernise FOS in specific recognition that "challenges can occur" when mass redress events arise.

The proposed changes are to be driven in collaboration with the FCA and FOS. Following the Chancellor's speech a joint Call for Input on the modernisation of FOS was issued, with specific reference to mass redress events. Such events are particularly relevant given the volume of vehicle finance complaints pending at the FOS, as discussed above. 

In principle, modernising FOS would seem to be entirely sensible and welcome but we risk a fixed 'one size fits all' approach which sits uncomfortably in a forum with jurisdiction to award redress up to £430,000 with limited (if any) oversight. However, modernising FOS may help the FCA to meet its secondary objective (being to facilitate international competitiveness and the growth of the UK economy), as it could give businesses (and consumers) greater certainty on how FOS will operate in a changing financial landscape. 

Another issue to watch out for is the FCA's Ongoing Advice Review, which is looking at the quality of service and value for fees for ongoing advice in the financial services sector. The outcome of this is expected in 2025. As was also highlighted in the retirement advice review, scrutiny of ongoing advice and the fees charged is something that has come to the fore following implementation of the Consumer Duty and is drawing ongoing attention from the FCA.

Explore Annual Insurance Review 2025