As firms continue to embed the Consumer Duty, the Financial Conduct Authority has published a series of ‘Dear CEO’ letters designed to support firms as they progress with their implementation. In this article, we focus on the letter addressed to the ‘consumer investments’ sector and the areas that firms should continue to focus on.

How should firms embed the Consumer Duty?

The FCA letter sets out four key areas where particular focus is needed from firms in the consumer investments sector:

Mainstream investments:

Consumers are at risk of receiving services that do not meet their needs or represent poor value. Firms are expected to identify these risks and address them where they arise.

Higher risk investments:

Some consumers continue to be invested in unsuitable high-risk investments. Firms need to ensure that their products and services are appropriately designed for the needs and objectives of their target market, and that they are being promoted and distributed effectively. The FCA is particularly concerned that the design of trading apps may lead to poor consumer outcomes, a topic we explored in our previous article on FOMO and gamification.

Scams and fraud:

Too many consumers are still losing money due to scams and fraud. Firms must act to avoid causing foreseeable harm to their customers and help prevent them from falling victim.

Consumer redress:

Firms are expected to act in good faith when they identify they have caused harm (through action or inaction), and to take appropriate steps to rectify the situation, which may include redress. Redress should be paid promptly when due.

What do the FCA ‘Dear CEO’ letters mean for firms in practice?

The FCA’s ‘Dear CEO’ letters are more than routine communications. They signal regulatory priorities and highlight areas where weaknesses have already been identified across the market.

In practice, these letters act as a benchmark against which internal frameworks, policies and controls should be assessed. Organisations should map the key themes against existing arrangements, identify any gaps, and document the actions taken in response. Where no changes are made, there should be clear evidence supporting that conclusion.

They also shape ongoing supervisory engagement, with the FCA often testing how the issues raised have been considered and embedded in practice.

Taking a proactive approach strengthens alignment with the Consumer Duty and demonstrates a culture of accountability.

Feedback on Consumer Duty implementation plans

The FCA has published feedback for firms on their implementation approaches. Key themes include:

Effective prioritisation:

Firms should ensure they are prioritising effectively, focusing on areas that will have the greatest impact on consumer outcomes.

Embedding the substantive requirements:

Some plans suggested firms may have considered the requirements superficially when deeming existing policies and procedures to be adequate. Firms should carefully assess the substantive requirements of the Duty and make any necessary changes to meet the expected standards.

Working with other firms:

Firms need to share information and work closely with their commercial partners to ensure consistent delivery of good customer outcomes. The FCA has identified that some firms need to accelerate this work.

Boards and senior management should focus on, and provide challenge across, these areas, alongside the wider points raised in FCA feedback.

What information should be evidenced under the Consumer Duty?

A consistent theme across FCA communications is the need for clear, accessible evidence demonstrating how good customer outcomes are being delivered.

In practice, this means maintaining robust documentation across several key areas:

  • Customer outcomes data – Evidence that products and services deliver fair value and meet the needs of the intended target market.
  • Decision-making rationale – Clear records showing how key decisions relating to product design, distribution and customer treatment have been reached.
  • Monitoring frameworks – Ongoing oversight supported by meaningful management information (MI), including defined triggers for escalation and review.
  • Third-party and distribution oversight – Documented engagement across the distribution chain, ensuring alignment on responsibilities and outcomes.
  • Remediation and redress actions – Records demonstrating how issues are identified, assessed and addressed, including timely customer remediation where harm has occurred.

This information should be readily available and sufficiently detailed to withstand regulatory scrutiny at any stage.

What are the next steps?

The FCA continues to treat the Consumer Duty as a cornerstone of its regulatory strategy. It is prioritised at every level of the organisation and continues to shape supervisory activity.

Firms should be prepared to provide evidence of how they are embedding the Consumer Duty and demonstrate the changes made to their business to comply with Principle 12. The FCA continues to engage with firms and act where standards are not met.

What are the key takeaways for firms?

The FCA continues to prioritise communications on the Consumer Duty. While the ‘Dear CEO’ letter does not introduce significant new requirements, it reinforces several key expectations:

  • Boards and senior management should embed the interests of customers into the culture and purpose of the firm.
  • Firms should not underestimate the requirements of the Duty. Where existing policies and procedures are considered adequate, firms should retain clear evidence of the analysis supporting that conclusion.
  • Firms should consider the type and granularity of data required to monitor and evidence consumer outcomes.
  • Firms should engage with others in their distribution chain to ensure information is shared effectively and obligations are met.
  • Principal firms should maintain appropriate oversight of appointed representatives (ARs) to ensure compliance with the Duty.
  • Co-manufacturers should have clear, documented agreements outlining respective responsibilities.

The Duty does not apply retrospectively to actions taken before it came into force, but it applies to existing products and services on an ongoing basis.

FCA ‘Dear CEO’ letters: next steps for firms

The themes highlighted in the FCA’s ‘Dear CEO’ letters should prompt a structured and proactive response.

A practical starting point is a gap analysis against the areas identified by the FCA. This helps to assess whether existing frameworks and controls align with expectations, and where targeted enhancements may be required.

Focus should be placed on identifying gaps, prioritising actions, and ensuring that any changes are clearly documented.

Taking this approach supports a more consistent and defensible response to FCA expectations, while reinforcing alignment with the Consumer Duty.

How can C&G help?

We work with our clients to ensure their approach to the Consumer Duty remains compliant, practical and aligned with FCA expectations.

If you would like us to review your framework or support any aspect of Consumer Duty compliance, contact us today.