As we are now well and truly underway with 2025, it feels like a great time to reflect on what the reality for firms has been from a compliance perspective over 2024 and what the rest of 2025 is looking like. Consumer Duty has reshaped the UK financial services industry, setting a higher bar for how firms serve their clients. The focus is no longer just on compliance but on delivering consistently good customer outcomes, requiring firms to be more proactive, transparent and accountable than ever before.
So, how prepared is your firm for the post-Consumer Duty world? For advisers and businesses navigating this new environment, having the right support is crucial. Joining a strong, forward-thinking network can provide the compliance expertise, resources, and infrastructure needed to stay ahead of evolving expectations.
The post-Consumer Duty landscape
We are obviously in a post-Consumer Duty world and if you think about the layers of regulation that we've had over the years and the approaches that the regulators had, we've moved from what was a rule based regulatory system, very specifically, ‘You must do this rule, you must comply with this rule’, into a principles-based regime. So, firms had a list of principles to adhere to, which basically say ‘here’s what you need to do and here's what you need to try and achieve.’ We're now in what the regulator calls an ‘outcomes-based regime.’
All of those things still apply. We've still got the rules, we've still got principles but on top of all that, firms must be able to prove that they deliver good outcomes for customers. This adds another layer of complexity as to how firms know exactly what the regulator requires and creates the potential to mean different things to different people. From a compliance perspective, it's easier to comply with the rule, but not as easy to comply with an outcome.
The job of compliance personnel, in a financial network, is to make sense of how to comply and then put it into procedures and processes that people can make sense of, so that they can understand what delivering a ‘good outcome’ looks like.
This is what the Consumer Duty landscape looks like and it’s difficult to navigate. You may think it is easy to understand what the regulator is asking us to do but the reality it’s not always quite that easy to put it into practice.
What’s on the horizon for compliance requirements?
In October 2024 the FCA published a ‘Dear CEO letter’ outlining what they've set out for the advice sector. This letter is their two-year plan which they're going to be building on more and more, with more information likely in the near future.
However, their key priorities for advisers are things like the ‘retirement income advice space.’ The FCA have already completed a thematic review in this area and they have expressed concern that some advisers are still not gathering enough information about their client’s retirement needs, or are not ensuring that income being taken is sustainable, for example, by using cashflow modelling.
They've also talked a lot about the delivery of ongoing advice services and there have been several headlines about firms struggling to provide and evidence this service.
Historically, whenever the regulator has had to write letters to those firms, or whenever they've had to take enforcement action, they would tell them ‘You’ve breached THIS rule" and they've given a specific reference. Now what they do, is they say, "you've not acted in line with Consumer Duty, you've not acted to deliver good outcomes", putting pressure on the firm to know exactly what that means and what it is in reference to.
The regulator is giving us a very high level of the Consumer Duty expectations and those expectations are "You should know what those good outcomes should look like, and must comply."
A data-led regulatory environment
What the regulator expects is for firms to have good, robust data and they have said that they will be more ‘data led’; intrusive and assertive. This means that they will look for data from firms and that they expect this to be accessible upon request.
Going back a few years, you used to be able to give the regulator lots of reasons and maybe even excuses as to why the data or evidence couldn’t be provided. Now it is simply ‘did it happen, yes or no?’ or ‘have you got the data, yes or no?’ and everything else is just incidental.
We are fortunate for being made aware of this. It is key that you have the data to back up what you’ve done, whether it be retirement income advice or ongoing advice services. This is something that for us, as a network, we can build.
For directly authorised firms or a smaller firm, it means nothing to the regulator to explain that you are compliant or have robust procedures. You've got to have the data to show that you've delivered good outcomes. The intrusive side of this is that if you do not have the data ready upon request, they’re going to be coming for you and this has been made clear.
The FCA are intentionally going out of their way to ask more questions, difficult questions and this is the current environment we find ourselves in.
The potential consequences of improper compliance processes
In recent months, there have been lots of high-profile advice firms that have struggled with delivery of ongoing advice services and haven't even got the data to show whether they’ve given it or not. The regulator hasn't fined those firms, what they’ve done is place them under a ‘Skilled Person's Review.’ This is someone else who goes into the business, which the firm has to pay for, to work out whether they’ve delivered reviews or not.
It’s worth noting that almost as soon as the Consumer Duty came into force, the regulator wrote to the bigger banks saying ‘we aren’t going to fine you; we're going to put a piece into the national press which has got your name on it. We expect you to provide better interest rates.’ The FCA are less concerned in instances like that, about fines and sanctions as those banks have got so much money, it won’t make a difference. What does concern them is clients not receiving good interest rates.
The same thing was done in the insurance sector. If we look at insurers that provide GAP Insurance on cars, which is one of the worst value insurance products that you can buy in terms of claims rates. The regulator has put out paper after paper to these firms stating, ‘these products are poor value, we know they're poor value, you know they're poor value.’
These firms weren’t fined or given any kind of censure, they were just told to withdraw the products from sale and take them off the market. This is quite a direct intervention, but it's the outcome to the customer that they were bothered about, as a fine doesn't really doesn’t have the same net-positive impact on the industry as a whole.
This very public demonstration of authority and action from the regulator has the power to cause severe and costly reputational damage to firms.
It’s worth highlighting that although the FCA are much more bothered about outcomes and less bothered about fines, it does not mean that they no longer fine, especially when there is what they call ‘harm to the market’. If there is an instance where the issue can be addressed by changing products or delivery of products, they just tell firms to do that. We have recognised this change and shift.
What does the changing regulatory landscape mean for mean for directly authorised firms vs those in a network environment?
What the regulator was happy with pre-Consumer Duty, was a process document or governance framework that explained what the firm will do. Now, they're looking at what the firm has done… And that's a big shift.
If you're a directly authorised firm, you've got to have readily available records to evidence what you've delivered, not what you will do or what you should do. In the network, we've had to build that MI, so that we can evidence what our appointed representative firms and member firms have done with their clients. “Here are the good outcomes and this is what has been delivered”. Although we still have to ensure robust advice processes are in place, it alone is no longer sufficient.
Most directly authorised firms will say that they have really robust processes but the regulator now wants more and wants to know what you have done, show what you've done and evidence what you've done. Remembering that they're a data led regulator, they expect firms to produce this data at a press of a button, this is what a network can help you with.
Find out more
Meeting these expectations is not a one-time exercise. As the FCA continues to monitor firms closely, with increased scrutiny on implementation and ongoing improvements, the regulatory landscape remains challenging. Firms that fail to embed Consumer Duty into their culture risk falling behind, or worse, facing regulatory intervention.
Whether you’re looking for specific Consumer Duty support or you have been thinking about exploring network offerings for a while, for more information on the ASHL Group Networks Lyncombe and Sense and the support that we offer to a nationwide community of forward-thinking Advisers and Firms, download our network services and benefits brochures to explore our offerings.
Unlike other networks, we will support you whether you choose an independent proposition or make use of our pre-built proposition because our focus is supporting our members to deliver the best outcomes to their clients, whichever way they feel best.
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