Financial Markets Disputes View: March 2026

What's coming up

AI x Dispute Resolution webinar series 2026 - this series running from now until December is designed for in-house counsel, risk and compliance professionals, and business leaders seeking practical, up-to-date insights into AI disputes. More details are available here.

How are courts treating AI use?

The problems inherent in the use of AI in court continues to attract attention. For example, several high-profile cases in the UK underscore the risks of inaccurate submissions. In Ayinde v The London Borough of Haringey, the Court emphasised that the administration of justice depends upon the unquestionable integrity of those appearing before it, after a barrister submitted grounds citing non-existent authorities and then characterised the error as merely "cosmetic". Similarly, submissions in Crypto Open Patent Alliance v Craig Steven Wright revealed 47 instances of forgery, with certain documents purportedly from 2008-2011 found to have been created shortly before trial, placing the respondent's solicitors "in an impossible position". These cases provide important context for the regulatory attention now being directed at AI-assisted legal drafting, where the potential for fabricated citations presents analogous risks.

Jurisdictions are adopting notably divergent approaches to AI disclosure requirements. Judicial guidance issued in England and Wales in October 2025 takes a principles-based approach, confirming that legal representatives bear responsibility for all material submitted and need not disclose AI use provided it is employed responsibly, though a consultation closing on 14 April is examining whether formal rules are warranted.

Singapore has adopted a similarly light-touch stance, permitting AI use without mandatory upfront disclosure whilst emphasising accuracy and reserving the right to require compliance declarations. By contrast, several US courts have implemented prescriptive disclosure regimes: the Northern District of Texas requires generative AI use to be declared on the first page of any brief, whilst an order made in the Eastern District of Pennsylvania mandates detailed disclosure of the specific AI tool used, the precise portions of text it generated, and certification that all citations have been independently verified. Meanwhile, in Australia, a New South Wales Practice Note from January 2026 prohibits AI use in generating affidavit and witness statement content entirely, requiring a negative declaration to that effect.

The comparative picture reveals a spectrum of regulatory philosophies. The UK and Singapore have thus far favoured outcome-focused frameworks that hold practitioners accountable for accuracy without mandating process transparency, reflecting confidence in existing professional obligations. The US approach appears to prioritise procedural transparency, requiring litigants and the court to know precisely how AI contributed to any filing. The Australian position represents the most restrictive stance, effectively prohibiting AI from generating evidential content.

For in-house counsel instructing external lawyers across multiple jurisdictions, these differences have practical implications: the same AI-assisted research methodology that currently requires no disclosure in London may necessitate detailed certification in certain US federal courts, and could be impermissible altogether for witness evidence in New South Wales.

Note: following on from the first session in our AI x Dispute Resolution webinar series, our team have written a quick guide covering key takeaways from the session.

Aberdeen v Hermes: New claim offers insights

A claim filed in August 2025 and now progressing through the English courts is offering valuable insight into the circumstances that might prompt a sophisticated Limited Partner to pursue litigation against a fund manager, notwithstanding the accepted risk profile inherent in long-term infrastructure investments.

The case highlights the tension between underperformance attributable to market conditions or investment risk, which LPs implicitly accept, and alleged management failures, which may give rise to actionable claims. Structurally, such claims face a threshold challenge: because managers are typically appointed by the fund via the General Partner rather than by investors directly, aggrieved LPs must bridge the contractual divide between themselves and the manager to establish standing and assert liability. Read more.

Modernising the FOS redress framework

In July 2025, HM Treasury, the FCA and the Financial Ombudsman Service (FOS) published parallel consultations on "modernising the redress framework", which were aimed at preventing FOS acting as a "quasi-regulator". On 16 March 2026, the FCA and FOS published a joint consultation paper (CP26/9) on proposals to modernise the framework. In parallel, the FCA issued Finalised Guidance (FG26/2) on good and poor practice when identifying and rectifying harm and HMT also published their response to the July 2025 consultation.

In short, most of the expected changes are coming, but not until the legislative timetable allows. The proposed reforms centre on a revised "fair and reasonable" test, which would require the FOS to find that firms acted fairly and reasonably where they have complied with relevant FCA rules, removing "good industry practice" as a consideration and applying only standards in force at the relevant time. However, HM Treasury has confirmed that the government will take a power to carve out certain rules from this test, particularly high-level obligations such as the Consumer Duty, leaving some uncertainty about how those cases will be assessed. A new FOS-FCA referral mechanism will also require the FOS to seek the FCA's views where rules are ambiguous, with the FCA obliged to respond within 30 days.

Several procedural changes are designed to reduce the burden of unmeritorious complaints. A new pre-registration stage will filter out complaints that are not "well-formed" or "appropriately evidenced" before a full investigation is undertaken, with no or reduced case fees until registration. The FOS is also consulting on reintroducing pre-2015 dismissal grounds for frivolous or vexatious complaints, complaints solely about investment performance, trustee discretion matters, and claims exceeding the maximum redress limit. Additionally, a new absolute 10-year time limit will apply to FOS complaints, with limited exceptions for longer-term products such as pensions.

The reforms also address governance, mass redress, and regulatory reporting. The government will directly appoint the FOS Chair. Treasury approval will be required for the Chief Ombudsman and the Chief Ombudsman will hold overall responsibility for FOS determinations. The FCA will gain enhanced powers for managing mass redress events, including the ability to pause complaints handling without consultation and redirect complaints to firms under redress schemes. Finally, enhanced SUP 15 reporting obligations, effective from 1 June 2026, will require firms to notify the FCA of issues affecting 40% or more of customers, significant redress sums, high complaint volumes, or where two or more customers in a product may lose £10,000 or more. The deadline for consultation responses is 11 May 2026.

French Duty of Vigilance: Litigation Tracker

Our Paris office has launched a comprehensive litigation tracker monitoring claims brought before French courts under the French Corporate Duty of Vigilance Law. The legislation, which came into force in 2017, requires large French companies to establish and implement vigilance plans identifying and preventing human rights and environmental risks throughout their operations and supply chains.

The tracker provides detailed information on enforcement actions, court decisions, and emerging litigation trends under this pioneering legislation, which has served as a model for similar corporate accountability regimes across Europe. As similar obligations are now being introduced at EU level through the Corporate Sustainability Due Diligence Directive, the French cases offer important guidance on compliance expectations and potential litigation exposure. FI clients with operations or clients in France should monitor developments closely given the potential application of vigilance obligations to financing activities and investment decisions.

Enforcement

The last few weeks have seen several large fines and a variety of firsts from the PRA - the first use of the PRA's new Early Account Scheme, the first time the PRA has fined a firm for failing to conduct its business with integrity, and the first time it has taken enforcement action against a parent financial holding company of a firm.

The PRA imposed a £10.625 million penalty on UK Insurance Limited, Direct Line Group's principal underwriting subsidiary, for breaches of PRA Fundamental Rule 6 (organisation and control) and various reporting requirements. This is the first use of the PRA's Early Account Scheme which offers enhanced settlement discounts for early cooperation. Read more.

The PRA fined The Bank of London Group Limited and its parent financial holding company Oplyse Holdings Limited £2 million for misleading the regulator over their capital positions, failing to act with integrity, failing to be open and cooperative with the PRA and failing to maintain adequate financial resources. This is the first time the PRA has fined a firm for failing to conduct its business with integrity and the first time it has taken enforcement action against a parent financial holding company of a firm. But for demonstrable serious financial hardship, the fine would have been £12 million.

The FCA fined Dinosaur Merchant Bank Limited £338,000 for failing to put in place effective systems and controls to detect and report suspicious trading in its contracts for difference business. Following the introduction of a new order system there was a sharp increase in trading by clients, but the trades were not reviewed by the firm's surveillance system meaning that potential market abuse could have gone undetected. The firm also failed properly to address the issue in a timely way after it had identified the problem.

John Wood Group PLC has been fined £12,993,700 by the FCA for publishing inaccurate information in its financial results. The FCA noted that the firm's desire to maintain its previously stated financial results despite a series of poorly performing projects influenced its accounting judgements.  Its systems and controls were not adequate to prevent this from happening. As a consequence, it published inaccurate information to the market. The FCA opened its investigation into Wood Group in June 2025 and concluded it within 9 months. The regulator says that this is is an example of how it is improving the pace of its enforcement investigations.

Cases

Cases catching our eye this month include an important sanctions-related judgment from the Supreme Court. In UniCredit Bank GmbH, London Branch v Constitution Aircraft Leasing (Ireland) 3 Ltd and another; UniCredit Bank GmbH, London Branch v Celestial Aviation Services Ltd [2026] UKSC 10 the Court unanimously dismissed the appeal by the aircraft leasing companies and allowed the bank's cross-appeal, holding that regulation 28(3)(c) of the Russia (Sanctions) (EU Exit) Regulations 2019, SI 2019/855 prohibited the bank from making payments under letters of credit until UK licences were obtained, meaning its payment obligation and the accrual of statutory interest were suspended. The court also held that section 44 of the Sanctions and Anti-Money Laundering Act 2018 provides a defence in civil proceedings, and would have protected the bank against liability for a debt, interest and associated costs where it acted in the reasonable belief that its conduct complied with the Regulations, emphasising the public purpose of sanctions to put pressure on Russia by disrupting strategic industries such as aviation.

In Tax Policy Associates Ltd v Kamal [2026] EWHC 551 (KB)the court made a declaration that claims in defamation and malicious falsehood, brought by a barrister against a journalist and blogger, were strategic litigation against public participation (SLAPP) within the meaning of the Economic Crime and Corporate Transparency Act 2023 s. 195. The definition of a SLAPP concerned the concept of a claimant improperly restraining a defendant's exercise of the right to freedom of speech under s. 195(1)(a). Considered objectively, the barrister's conduct of the proceedings showed a history of compliance failures and disproportionality: his claim was greatly exaggerated and sought remedies the court could not order. His behaviour was not recognisable as "properly conducted litigation" and it was clearly his intention to intimidate and cause the applicants unwarranted and extraordinary inconvenience. The court struck the claims out in their entirety.

A settlement agreement entered into between the Visa entities and Luxottica related to multilateral interchange fees had the effect of precluding claims by a company called Grand Vision NV after Luxottica later acquired it. The offer to settle which Luxottica had accepted offered "the full and final settlement of the Claim and all similar claims by the claimant and/or other entities within its corporate group". The effect of the settlement was that Luxottica was obliged to ensure that, once Grand Vision NV became an entity in its corporate group, it withdrew its claims and that Luxottica indemnify the Visa parties for those claims. Visa Inc & ors v Luxottica Retail UK Ltd[3][2026] EWHC 615 (Comm).

In determining a claim for a commission fee for arranging finance, the court interpreted an engagement letter and a tripartite agreement, including interpreting the word "introduce" and the phrase "jointly pursuing" and refusing to imply a term that the claimant's actions needed to be the effective cause of finance being acquired. Alphier Capital Two LLP v Blyvoor Gold Capital (PTY) Ltd [2026] EWHC 244 (Ch).

In case you missed it

The fourth webinar in our Russia sanctions litigation series - recent developments and future risks. We are pleased to share access to the recording and slides. If you were unable to attend live, or would like to revisit this session or any of our previous three sessions, you can find the materials here Webinar recordings Webinar slides.

Doing business across borders podcast - in this podcast, we discuss the challenges of cross-border trading and investing in an increasingly fragmented geopolitical and economic landscape. Listen here.