Financial Markets Disputes View: July 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.

Public Domain Court Documents

Since 01 January 2026, cases in the Commercial Court and Financial List have been part of a 2 year pilot giving the public access to documents necessary to understand cases that go to hearing.

On 17 June 2026 the Court handed down the first reported decision (Various Claimants v Entertain Plc) on an application for a Filing Modification Order. Our article setting out the detail of the decision and the factors the Court will take into account is here.

AI use for Court documents

In our March edition of Disputes View we commented on how courts are treating AI use. Since then, we have seen the decision in Cork & Anor v Smith [2026] EWHC 1199 (Ch) where the Court considered a misleading statement of law in one letter to the Court, and a further letter which mis-represented how that letter had come to include what was clearly an AI hallucination.

There are a few interesting points to take from the judgment. First, those supervising the junior lawyer who drafted the letters were unaware that AI had been used and so didn’t ask the questions that they might otherwise have done. Second, the AI tool did flag that it may be wrong and that the junior lawyer should check whether it was correct: “I want to be candid with you – I am not fully confident that I am producing the exact statutory wording of Rule 12.37(5) with complete precision”. Third, junior lawyers can spend a lot of time chatting to the AI – in total 59 pages of chat were disclosed by the law firm.

For those supervising work which has been created using AI the expectations of the Court were clear: junior lawyers must be informed that they “should check all references given by AI and be candid, when reporting the result of their research to their supervisors, as to whether AI had been used in that research and whether the content generated by the AI had been checked”.

A this was a case of “mere negligence as to the falsity of the material”, the Court did not consider that contempt of court proceedings were not appropriate. However, we shall have to see what action the SRA decides it is appropriate to take.

Enforcement

The FCA has decided to fine Carlos Fuenmayor, chief executive of BancTrust, £99,600 for failing to disclose three separate matters to the regulator.

The FCA found that Mr Fuenmayor repeatedly failed, over a period of years, to notify it of a US FINRA investigation and subsequent sanction, as well as regulatory action taken against him in Venezuela, despite multiple opportunities to do so.

The case, which has been referred to the Upper Tribunal, shares hallmarks with other recent enforcement actions, including those involving Mr Staley, the PRA’s Bank of Tokyo case, and the FCA’s action against Mr Käärmann. All of these cases emphasise that firms and Senior Managers must deal with the FCA and PRA openly and cooperatively, including in relation to overseas regulatory matters and issues, even where these arise in their personal lives, as they may be relevant to their ongoing fitness and propriety.

The FCA’s recent updates to Senior Manager Conduct Rule 4 further reinforce its expectations, highlighting that Senior Managers’ proactive disclosure obligations are ongoing.

The key message? Senior Managers should err on the side of disclosure when it comes to matters that may be relevant to their fitness and propriety. In particular, they need to understand what may be relevant to their fitness and propriety and properly scrutinise regulatory submissions relating to them and/or their area of the business to ensure they are accurate, comprehensive, and not misleading.

Finally, the FCA is consulting on changes to DEPP to allow it to be tougher when fining individuals. The key changes are:

• Updating the treatment of individuals’ deferred income, when relevant to penalty calculation in light of the changes to penalties in Staley v FCA and Gonzalez v FCA made by the Upper Tribunal in 2025. The proposal is to treat relevant income: (i) benefits received after the misconduct period but earned during it and (ii) income that is uncertain when calculating the penalty but that may be estimated or adjusted for likelihood of receipt. What will not be relevant income is: (i) benefits that is known, by the time the FCA calculate penalty, will never be received; and (ii) benefits received during the misconduct period but earned in a prior period.
• Changes concerning the deterrent aspect of the penalties imposed on individuals to (i) increase the minimum initial disciplinary penalty level for serious market abuse committed by individuals from £100k (as set in 2010) to £150k, which will be updated every 2 years in line with CPI plus housing cost inflation; and (ii) clarify the ability to increase penalties on individuals for deterrence having regard to their wealth, even where their relevant income was material.
• Revising the composition for the FCA’s settlement decision-making process where cases are referred from Market Oversight for investigation so that it is not required for one settlement decision-maker to come from outside the Enforcement and Market Oversight Division – thus allowing a Director or HoD from Market Oversight to be involved (which removes some of the independence, but adds an SME).

Cases

The Court of Appeal in Angel v Black Horse [2026] EWCA Civ 831 permitted the claimants to continue a mass claim on behalf of over 5k motor finance customers under a single claim form, having paid a single court fee.  This should not be seen as creating precedent because the defendants were seeking to overturn a High Court case management decision, so they faced a high hurdle. It's also worth noting that the court was clear that, in trying to knock this litigation into some sort of shape, you would not choose to be starting from here. The Law Commission of England and Wales is examining the potential introduction of a dedicated consumer class-action regime, which is likely to increase pressure on courts dealing with large-scale consumer claims.  Interestingly, in Angel the Court of Appeal invited HMCTS to collect relevant statistics on the fee revenue being lost by the adoption of single claim forms in these cases. 

In Barclays and others v FOS [2026] EWHC 1555 the court upheld the banks’ judicial review challenge to the FOS’s attempt to extend its jurisdiction (from a limitation perspective) for four cases under s140A of the Consumer Credit Act 1974.  In each case FOS stated that, where a creditor-debtor relationship is unfair, a “corrective responsibility” arises which requires the bank to address the unfairness, failing which there are further continuing omissions and time does not begin to run, let alone run out for jurisdictional purposes.  This was rejected by the Court, which noted that it would undermine not only the statutory imperative for creating a time limit in FSMA, but also the statutory purpose of FOS as a swift and informal dispute resolution service. This decision is particularly interesting when viewed against the backdrop of the recent consultations from HMT and the FCA on the FOS’s role and the new 10 year limitation long stop.

In the Courts we saw two decisions relating to anti-suit injunctions. In JP Morgan Securities Plc & Ors v VTB Bank PJSC [2026] EWCA Civ 589 the Court of Appeal dismissed a Russian bank's appeal against anti-suit injunctions restraining it from pursuing claims in the Russian courts against JP Morgan entities in breach of arbitration agreements. This was in part because of the arbitration provisions in the terms of business, but also as the Russian proceedings were vexatious and oppressive, being designed to circumvent London arbitration clauses and the UK sanctions regime.

In Spec 1 Ltd v Export-Import Bank of China [2026] EWHC 1162 (Comm), the High Court dismissed the defendant lender's application to stay English proceedings in favour of Singapore. It also dismissed the claimant borrowers' applications for anti-suit and anti-anti-suit injunctions. Both sides' applications failed because the asymmetric exclusive jurisdiction clause in the loan agreement they had entered into contemplated parallel proceedings in multiple jurisdictions.

In R (on the application of Innsworth Capital Ltd) v The CAT and Walter Merricks CBE [2026] EWHC 1393 (Admin), Innsworth Capital Ltd, the funder behind the CAT class action against Mastercard, failed in its appeal against a decision of the CAT to allow the funder a profit of no more than 50% of the capital it had invested, due to the £200m settlement of the £14bn claim representing a very poor outcome for the 44m consumers. The Court held that the CAT’s approach to determining the distribution of the settlement sum was legitimate and the scope for an appeal was narrow.

In White v Uber London Ltd [2026] 6WLUK 270 the claimant group was ordered to disclose documents created when their solicitors had been engaged by a litigation funder to investigate the claim in order for the funder to decide whether to fund it. Litigation privilege could, in principle, be claimed by a non-party to litigation, and applies to documents created for the dominant purpose of litigation, which includes deciding whether to litigate, but not whether to fund litigation. If not appealed, this case could create difficulties for funded parties where information has been exchanged with potential funders for the purpose of them deciding whether to fund the litigation.

In Logix Aero Ireland Ltd v Siam Aero Repair Company Ltd [2026] EWCA Civ 510, the Court of Appeal considered whether the disclosure of information potentially in breach of a contractual confidentiality clause would still give rise to liability where the disclosure was unknowingly facilitated by third-party fraud. The Court of Appeal held that an assumed breach of a confidentiality clause was not the effective cause of loss where information was unwittingly disclosed to fraudsters.

In RTM v Bonne Terre Ltd and Hestview Ltd [2026] EWCA Civ 488, the Court of Appeal allowed an appeal by online gambling operators against a High Court finding that a problem gambler had not given legally valid consent to cookies, data processing and direct marketing under the GDPR, DPA 1998 and PECR.

The criminal law principle that a sole director and his company could not conspire did not govern the tort of civil unlawful means conspiracy. Under civil law a director could conspire with his own one-man company and so be liable for unlawful means conspiracy. Lux Films Ltd v Fowler [2026] EWHC 963 (KB)

Simmons & Simmons support Ultra Electronics to agree a Deferred Prosecution with the SFO

On 1 May 2026, the SFO entered into its first DPA in 5 years, with Ultra Electronics Holdings, approved by Mr Justice Hilliard. The DPA related to historic bids for contracts in Oman and Algeria, which involved payments by group companies that included commission arrangements designed to facilitate corrupt payments to officials. Under the three-year DPA, UEH agreed to pay a financial penalty of approximately £10.1 million and the SFO’s costs of £4.8 million within 30 days. No disgorgement order was made because the relevant contracts were either not won (Algeria) or generated no profit (Oman). The Court noted Ultra’s exemplary cooperation with the SFO since 2022 and the implementation of a comprehensive compliance remediation programme, including enhancements to its anti-bribery and corruption controls.

A revised approach to investment product risk warnings

In December 2025 the FCA published a short note on Risk warnings for mainstream investments. One interesting point was the FCA’s statement that, although COBS 4.2.4(1) states that a financial promotion must make it clear if the product places a client’s capital at risk, the FCA was not prescribing the wording that should be used and behavioral research had found that stating “capital is at risk” is ineffective.

In April 2026, the Investment Association (supported by HMT and the FCA) published a paper on risk warnings. The message, consistent with the Government’s growth objectives and the FCA’s Consumer Duty, was that risk warnings were putting too many people off investing and in future:

• Disclosure on risk should be contextualised and balanced
• Clear and accessible language should be the basis for all communication with consumers
• Statements in communications with consumers should be proportionate, credible and effective
• Risk messages should be fitted to the consumer journey.

Our article on the detail of the paper is here. We are discussing the practical implications with a number of clients. Do get in touch with Caroline Hunter-Yeats if you would like to discuss your approach.

A regulatory focus on claims management companies

For anyone focussed on retail customers, it will be welcome news that FCA is focussing on CMCs.

On 5 May 2026 the FCA announced a joint regulatory taskforce (with the Solicitors Regulation Authority, Information Commissioner's Office and Advertising Standards Authority) to tackle poor handling of motor finance claims.

On 19 May 2026, FCA launched its Market Study to gather evidence to understand the root causes of practices we have observed by firms in the claims management market and how they impact competition and consumer outcomes.

The FCA expect to share early findings and consult on potential proposals later in 2026, with the final report due by May 2027.

On 4 June 2026 the FCA announced that it has opened its second enforcement investigation into a motor finance claims management company (this time regarding Consultation Claims Limited) following concerns in the period April 2025 to December 2025 that it may have been signing customers up without their consent.

While on motor finance claims it is relevant to note that a claimant law firm is said to be bringing separate claims against lenders over unaffordable loans, thus seeking damages in excess of the FCA redress scheme calculation. This is exactly the sort of challenge to the s404 scheme which the FCA was hoping to avoid, given its aim to deliver the “fastest, simplest route for consumers and the most efficient way for firms to put things right and give certainty to their investors”.

In case you missed it

As part of this year’s London International Disputes Week, we co-hosted a series of in person sessions at our London office on 3-4 June. These sessions explored a number of the current pressures facing businesses, how they are now playing out in practice, and what they mean in today’s operating environment. We have distilled some key takeaways and insights from each session, which can be accessed via the link.