Consumer Duty Year Two: What Changed and What's Next

The FCA has moved from education and guidance to active enforcement of Consumer Duty requirements. Year two saw multiple high-profile enforcement actions for marketing communications failures, particularly around investment promotions and unbalanced messaging. The regulator clarified that generic disclaimers do not satisfy substantiation requirements-firms must hold specific evidence supporting all marketing claims.

Social media received intense scrutiny with several firms sanctioned for Instagram and LinkedIn posts failing to include adequate risk warnings or being unclear about commercial relationships. The FCA published additional guidance on foreseeable harm-firms must proactively identify how marketing could mislead specific consumer groups and take preventive action. Investment content targeting younger audiences faced particular scrutiny given risks of oversimplification or failing to convey volatility clearly.

Cross-selling and bundled services came under examination-the FCA challenged whether consumers understand what they are buying and whether bundling delivers genuine value or primarily benefits the firm. Vulnerable customers became an enforcement priority-firms must demonstrate systems identifying vulnerability and adjusting communications appropriately.

Several networks faced FCA challenge over their oversight of appointed representatives, with particular focus on whether approval processes actually assess Consumer Duty compliance or merely check for obvious rule breaches. The clear trend: Consumer Duty is not a box-ticking exercise but requires genuine cultural change in how firms approach consumer interests. The FCA expects firms to demonstrate that consumer outcomes drive decisions, not just that processes exist on paper.

Enforcement actions and regulatory feedback identify recurring marketing compliance failures: Claims lack substantiation-statements like "award-winning service" or "exceptional returns" without specific supporting evidence. Unbalanced communications-highlighting benefits while minimising risks or burying important information in footnotes. Unclear or confusing language-using technical jargon or complex sentence structures that typical target audiences cannot readily understand.

Missing or inadequate risk warnings-particularly for investment products or pension transfers where potential downsides require clear explanation. Pressure or urgency tactics-"limited time offer" or similar language potentially causing consumers to make rushed decisions not in their interests. Inadequate disclosure of costs and charges-failing to clearly explain what consumers will pay and impact on investment returns.

Cherry-picked performance data-showing best-performing periods or products without context about typical performance or range of outcomes. Social media posts lack required warnings-character limits do not exempt firms from Consumer Duty, requiring creative solutions to communicate adequately in constrained formats. Testimonials without balance-customer reviews highlighting positive experiences without acknowledging that results vary or risks exist.

Comparison claims without fair basis-stating you are "better" or "cheaper" than competitors without robust evidence and fair comparison methodology. Many of these failures stem from marketing materials created before Consumer Duty but not reviewed and updated to meet new standards. The FCA expects ongoing review of all consumer-facing materials, not one-time compliance projects.

Advisers should audit their entire marketing presence quarterly, ensuring everything from website copy to email templates to social media meets current requirements. Partner with compliance from the start of campaign development rather than treating compliance as approval checkpoint after creative work completes-this approach reduces revision cycles and builds better understanding of requirements throughout teams.

Consumer Duty fundamentally changes what regulators expect from firms. Previous compliance focused on process-did you follow required steps and include mandated warnings? Consumer Duty focuses on outcomes-do consumers actually understand your communications and do they receive good outcomes from your services?

This requires firms to gather evidence: Testing marketing materials with target audiences ensuring comprehension, tracking consumer questions and confusion points revealing communication failures, monitoring outcomes for different consumer segments identifying whether particular groups receive systematically worse outcomes, and documenting decision-making showing consumer interests were genuinely considered not just retrospectively justified. The FCA wants firms to demonstrate that when consumer interests conflict with firm interests, consumer interests prevail. Example: if analysis shows that bundled services increase firm revenue but many consumers would be better served with unbundled options, offering only bundles likely violates Consumer Duty regardless of disclosure quality.

Firms must actively identify foreseeable harm-what could go wrong with your products or services, and have you taken reasonable steps to prevent it? This is not theoretical exercise but requires genuine analysis of your business model, client base, and services. Distribution strategy comes under scrutiny-if you target marketing towards demographics or channels where consumers are more likely to misunderstand or make unsuitable decisions, the FCA will challenge whether you are meeting Consumer Duty.

Documentation matters enormously. When the FCA asks why you made particular marketing decisions or how you concluded your communications are clear, you must produce evidence beyond "we discussed it and agreed. " Meeting minutes, testing results, outcome monitoring, and clear decision rationale should exist for significant marketing activities.

The regulatory approach: Consumer Duty requires cultural change demonstrating consumer interests genuinely drive firm behaviour, not superficial changes to materials or processes while maintaining business-as-usual mentality. Advisers embracing this mindset proactively will navigate regulation successfully while those seeking minimum compliance or loopholes face ongoing regulatory risk.

Prepare for 2026 Consumer Duty requirements through systematic action: Audit all existing marketing materials against current Consumer Duty guidance, prioritising highest-volume or highest-risk materials. Update or remove anything not meeting standards. Implement substantiation requirements-for every claim in marketing materials, document the evidence supporting it.

Create a substantiation file for each major campaign. Build consumer testing into marketing development-show key materials to representative consumers and document their understanding before launch. Enhance compliance training ensuring marketing teams understand not just rules but underlying principles of consumer-focused communications.

Establish outcome monitoring for different consumer segments-track whether certain groups receive worse outcomes suggesting your services or communications are not working for them. Review your target market definitions-are you marketing to audiences appropriate for your services or reaching people for whom your offerings are unsuitable? Strengthen network approval processes if you are appointed representative-ensure submissions to your network include Consumer Duty considerations not just traditional compliance.

Document decision-making for significant marketing choices-why you selected certain channels, messaging approaches, or target audiences. Implement quarterly compliance reviews rather than annual-Consumer Duty expectations continue evolving requiring regular assessment. Build relationships between marketing and compliance as collaborative partners rather than adversarial functions-this dramatically improves both efficiency and compliance quality.

For 2026, expect continued FCA focus on Consumer Duty with more enforcement actions and refined guidance. Advisers with robust compliance infrastructure will market confidently while competitors remain paralysed by regulatory uncertainty. This confidence enables consistent market presence capturing share from less prepared competitors regardless of your firm size or resources.

Progressive advisers recognise Consumer Duty as opportunity rather than burden. Many competitors have reduced marketing activity or social media presence fearing regulatory risk, creating market share opportunities for advisers marketing confidently within compliant frameworks. Consumer Duty requirements-clear communication, balanced information, genuine consumer focus-align with effective marketing principles.

Materials meeting Consumer Duty tend to perform better because they genuinely help consumers understand rather than obscuring through jargon or incomplete information. Building compliance capability enables faster campaign launches. Firms with established approval workflows, template libraries, and trained teams deploy campaigns quickly while competitors spend weeks seeking compliance approval or avoiding marketing entirely.

Consumer Duty forces beneficial discipline around substantiation and evidence. Marketing claims backed by solid evidence are more credible and persuasive than generic statements, improving campaign performance beyond just compliance. The focus on vulnerable customers and foreseeable harm drives better service design.

Advisers proactively identifying and addressing potential consumer harm build stronger businesses with better client outcomes and lower regulatory risk. Documentation requirements create institutional knowledge. Recording decision rationale and consumer testing builds organizational learning improving future campaign development.

For 2026 and beyond, advisers treating Consumer Duty as strategic capability rather than compliance burden will outperform competitors viewing it as obstacle. Invest in compliance infrastructure, train teams thoroughly, build systematic processes, and market confidently knowing your approach satisfies regulatory expectations. The firms paralysed by Consumer Duty uncertainty cede market share to those who adapted successfully.

This dynamic accelerates in 2026 as regulatory expectations become increasingly clear and enforcement intensifies. Position your practice as confident, compliant, and consumer-focused capturing opportunities competitors fear to pursue.