Compliance Matters: Week ending 23rd January 2026

Here is a digest of regulatory issues that have come into my inbox this week.  I have provided high-level summaries and hyperlinks to documents that give further detail.

• Protection advice is about people, not policies

• Oxford Risk: Your suitability fears are unfairly restricting your clients’ growth

• 3.3 million people will be hit by the salary sacrifice cap.

• New regime for securities and what consumers should look out for

• Stablecoins: preparing for disruption

Protection advice is about people not policies

In an opinion piece in Professional Adviser, Emma Astley of CoverMyBubble suggests 10 areas where advisers can improve how protection advice.  She states “protection advice should never be a tick-box exercise.  Done properly, it can change lives, support families through a crisis, and give people genuine peace of mind when they need it most.”  The ten areas are:

1. Applications should not be rushed.  Care should be taken when completing application forms, do not let an incomplete or inaccurate proposal form render the cover as voidable..

2. Joint cover is not always the correct answer.  There may be more flexibility in two single policies.

3. Discuss applications with product providers, particularly if the application is complex.

4. Search the market, use the resources we have in Aylesbury.

5. Protection is a suite of solutions,

6. Document your client conversations, particularly if budgetary constraints restrict the amount of cover you are able to recommend.

7. Income protection is as important as life cover.

8. Do not forget relevant life cover, executive income protection and key person cover for business owners

9. Support clients through the claims process.

10. Review protection plans in the same way as you would investments and pensions

Protection is an essential part of financial planning and protection advice can be lucrative.

Oxford Risk: Your suitability fears are unfairly restricting your clients’ growth

I have deliberately retained the heading from this thought piece published in PA Adviser to provoke a reaction and to get you to read the article.  It raises some interesting questions about how we link ATR to suitability.

If we invest a client’s assets ‘in line with their risk tolerance’ as it is typically understood when risk tolerance is loosely used as a proxy for overall suitability, there is a high chance they are taking an unsuitably low level of investment risk.  The wealthier they are, the more unsuitably low this level is likely to be.

An investor’s suitable level of investment risk is a function of their willingness and ability (both financial and emotional) to take that risk, adjusted, where necessary, to account for their knowledge and experience, and a handful of relevant preferences.

In practice, willingness ought to be measured by risk tolerance, financial ability by risk capacity, and emotional ability by behavioural capacity.  For most investors, their risk capacity – a dynamic reflection of their current and future financial circumstances which shapes their reliance on their current investible assets to fund their future spending needs – is by far the most important element of this equation.

3.3 million people will be hit by the salary sacrifice cap

The government is introducing a £2,000 salary sacrifice cap for pension contributions, with effect from April 2029, meaning only the first £2,000 of sacrificed salary per year will be exempt from NI for both employees and employers.  Amounts above this £2,000 limit will be treated as normal earnings, subject to Class 1 NICs (8% employee, 15% employer for most).  This does not affect income tax relief, and salary sacrifice remains highly beneficial for tax efficiency, especially for higher earners, but it focuses the NI advantage on lower/middle earners and raises revenue.

An estimated 3.3 million people using salary sacrifice to boost their pensions are set to be hit by the cap according to the Government’s impact assessment.  Former Pensions Minister and LCP consultancy partner Steve Webb has criticised the change and warned “that hitting people at a time of chronic pension under-saving will make matters worse.”  According to the Government assessment, around 7.7 million employees use salary sacrifice, approximately 20% of the workforce.  Of those, around 42% will be impacted by the cap.

Assess which of your clients contribute to their pensions using salary sacrifice and particularly for high earners who use it to reduce their income tax, help them calculate the impact of the change.  It will probably still be suitable for them to continue to make use of salary sacrifice.

New regime for securities and what consumers should look out for

The FCA has published a news story aimed at consumers considering investing in high-risk securities such as mini-bonds and loan notes that they should continue to be cautious.  Whilst we do not advise clients regarding these products, we may onboard a client who holds them.  This is to make you aware of the FCA’s thinking.  The FCA’s note states:

“On 19 January 2026, the Public Offers and Admissions to Trading regime came into force.  The regime sets new rules and standards about when an offer of securities to the public can be made.

A security is a financial instrument that represents some type of financial value (for example, shares, bonds, and stock) that can be traded on a financial exchange.

The types of securities within scope of this regime include transferable securities (such as shares on a stock exchange) as well as non-transferable debt securities (including  mini-bonds and loan notes).”  You can read the rest of the note for consumers in the hotlink above.

Stablecoins: preparing for disruption

A stablecoin is a type of cryptocurrency designed to maintain a stable value by pegging to an external asset, like the U.S. dollar or gold, offering a less volatile digital alternative to assets like Bitcoin for payments, trading, and as a store of value.  They use various methods, such as holding reserves (fiat-backed), using algorithms, or backing with other crypto, to keep their price steady, making them useful for everyday transactions and bridging traditional finance with blockchain technology.

Stablecoins have moved from the fringes of finance to the mainstream.  They are expected to reshape payments systems and impact firms across the financial services sector.  A recent FT article described how the increased use of stablecoins is expected to lead to a ‘fundamental rewiring’ of the financial system.

The total value of issued stablecoins has surged to USD 280 billion, up from USD 200 billion at the start of 2025 and USD 120 billion 18 months ago.  It is forecast to reach more than USD 400 billion by year-end and USD 2 trillion by 2028.

Stablecoins make it easier for consumers to invest in and cash out of other cryptocurrencies - 80% of all crypto transactions now involve stablecoins.  They offer faster and cheaper payments and are also valued as providing easy access to a proxy for USD, very popular for people in countries with high inflation or volatile currencies.

But what does this mean for traditional financial institutions?  There will be opportunities as well as challenges, but disruption to the status quo is certain - which firms will need to carefully navigate.

More detail can be found here in an article by Grant Thornton.