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FCA in Motion: Tough Enforcement & Redress Reform

August 1, 2025

FCA in Motion: Tough Enforcement & Redress Reform

This week’s updates reinforce the FCA’s dual commitment to enforcement and redress reform. The regulator initiated High Court action against an alleged £23 million unauthorised CIS, froze assets, and warned firms on investment vetting. A high-profile ban and fine for H2O’s former deputy CEO reaffirmed personal accountability. In contrast, FCA dropped proceedings against Tom Hayes and Carlo Palombo after their convictions were overturned - highlighting enforcement limits. Meanwhile, the appointment of Liam Coleman as interim chair of the Financial Ombudsman Service marks the beginning of planned redress system reforms. The era of stricter oversight, elevated leadership scrutiny, and modernisation of complaint handling is clearly underway.

Headline Why it matters Next 30 days actions
H2O Deputy CEO fined £1m banned financial services misleading FCA (25/07/2025) This enforcement action highlights the FCA's strict stance on misleading information and individual accountability, sending a clear warning to senior managers across the financial sector.
  • Review internal protocols for communication with regulators to ensure accuracy and transparency.
  • Reinforce board-level compliance training on FCA interactions and expectations.
  • Assess internal governance to ensure robust oversight of senior management conduct.
FCA appoints Liam Coleman as interim Chair of the Financial Ombudsman Service (28/07/2025) The appointment of an interim Chair signals changes in leadership at the Financial Ombudsman Service (FOS), which plays a crucial role in resolving disputes between consumers and financial firms.
  • Monitor FOS announcements for any immediate changes in operational focus or priorities under new leadership.
  • Financial firms should ensure their complaints handling processes align with FOS expectations.
  • Consumers should be aware of continuity in dispute resolution services.
FCA acts on alleged £23 million unauthorised collective investment scheme (29/07/2025) Demonstrates the FCA's proactive measures against unauthorized investment schemes and potential fraud, highlighting consumer protection efforts and the risks of unregulated investments.
  • Consumers should verify FCA authorization before investing in any scheme.
  • Firms should review their processes for identifying and reporting suspicious unauthorized activities.
  • Stay alert to warnings from the FCA regarding investment scams.
Discontinuance of proceedings against Tom Hayes, and revocation of Carlo Palombo’s prohibition order (25/07/2025) These developments in high-profile cases (likely related to market manipulation) provide clarity on individual accountability and legal outcomes, impacting precedent for market conduct.
  • Compliance teams should review the implications of these legal outcomes on internal conduct policies.
  • Firms should reinforce training on market abuse and ethical conduct, considering any new clarifications.
  • Monitor for any further statements or guidance from the FCA regarding these cases or broader market conduct.

£23m CIS Scheme Under FCA Scrutiny

The FCA has opened High Court proceedings over an alleged unauthorised collective investment scheme that raised £23 million for static home investments. Assets have been frozen, and promoters banned.
Action point: Vet all CIS-related partnerships and investment structures carefully.

Senior Accountability: H2O Executive Penalised

A £1m fine and lifetime ban was handed down to H2O’s Deputy CEO for misleading the regulator—a sharp reminder: executive-level compliance matters more than ever.

Trouble Falls Away: Hayes & Palombo

The FCA ended action against two legacy traders after the Supreme Court quashed their convictions. It’s a rare retreat—but a reminder that enforcement is subject to legal challenge.

Ombudsman Shake-Up: New Interim Chair

With Liam Coleman stepping in as interim chair of the Financial Ombudsman Service starting in October, redress reform is on the horizon. Expect consultation on case fees and resolution timelines to modernize complaint handling.

Final Thought

This week highlights both ends of the regulatory spectrum: from aggressive enforcement to meaningful reforms in redress. Firms that strengthen vetting, bolster leadership integrity, and prepare for systemic changes in complaints handling will be best placed to respond.

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FCA  •  Authorisation

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