Financial institutions continue to operate under intense regulatory scrutiny, facing significant risk at every stage of the regulatory lifecycle. Customer liabilities can arise in numerous ways, as highlighted most recently by the ongoing motor finance commissions investigation.

To manage these exposures, most financial enterprises rely on a suite of insurance products, including investment management insurance, financial institutions professional indemnity (FIPI), and, to a lesser extent, directors’ and officers’ (D&O) and general corporate liability policies.

The financial institutions chapter of the Policyholder Review 2026 brings together emerging trends, recent case law and insights to support policyholders as they navigate the risk landscape. Please find extracts from the chapter below.

Regulatory redress schemes

The statutory framework imposing liability on financial institutions for regulatory breaches and other wrongful acts committed against consumers is extensive, as demonstrated by the Court of Appeal’s judgment in a recent challenge to the jurisdiction of the Financial Conduct Authority (FCA).

FCA v Bluecrest Capital Management [2024] EWCA Civ 1125

In Bluecrest, the insured fund manager sought to challenge the FCA’s proposed imposition of a regulatory redress scheme, as well as financial penalties, in response to alleged failures to manage conflicts of interest. These were considered by the FCA to breach Principle 8 of the FCA Handbook, which provides: “A firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.” The court ultimately concluded that the FCA had acted within the scope of its authority and that the redress scheme and the fines were lawful.

Limitation that knows no bounds: has this been given adequate consideration?

When assessing risk, and in particular when acquiring another company, the exposure to claims arising from historical events should not be overlooked. Henrietta Gordon, Head of Financial Institutions Claims at Howden, examines the longstop protection provided by section 14B of the 1980 Limitation Act: “the 15-year rule” and the exceptions to the 15-year rule

In simple terms, a civil claim for damages for negligence cannot be brought more than 15 years from the date (or, if more than one, the last of the dates) of the act or omission. This is intended to avoid creating indefinite liability.

There are two key ways for claimants to circumvent the protection afforded to potential defendants by the 15‑year rule.