July 2025 marked two years since a landmark shift in UK financial regulation was introduced—the FCA’s Consumer Duty for open products. Since then, firms within the financial sector have been challenged to move beyond compliance and demonstrate they are delivering genuinely good outcomes for consumers. On 30 September, the FCA published its latest corporate document outlining Consumer Duty focus areas for 2025-26. This introduced new priorities around outcome monitoring, product governance, and customer understanding.
Now, with the FCA’s evolving expectations and the parallel reform of the Senior Managers and Certification Regime (SM&CR, or SMCR), the asset and wealth management industry is facing a new wave of scrutiny and reform. Particularly where governance, clearer accountability and customer-centricity are concerned.
With the landscape constantly evolving, it’s crucial to stay on top of the FCA’s Consumer Duty guidelines and other regulations to ensure compliance. Here, we explore the Duty’s requirements, and what asset and wealth managers need to know and do, to stay ahead.
Consumer Duty: From implementation to impact
The FCA’s Consumer Duty has been a key driver in changing how firms approach customer outcomes. For asset and wealth managers, this means moving beyond traditional compliance models and embedding a culture of doing the right thing, providing fair value to clients, transparency and proactive support.
The Consumer Duty principle requires firms to deliver good outcomes for retail customers (Principle 12). This is underpinned by the three cost cutting rules, requiring firms to act in good faith, prevent foreseeable harm and support customers in achieving their financial goals.
These rules are supported by the four outcomes whereby all FCA-related firms (and those who have a material influence over retail customer outcomes) must consider:
- Products & services: Design products and services that meet the needs of a clearly defined target market
- Price & value: Ensure products and services provide fair value for the price paid
- Consumer understanding: Communicate clearly and engage with customers to support timely, informed decisions
- Consumer support: Provide ongoing support that meets customer needs throughout the product and service lifecycle
The FCA’s September update reinforces these outcomes with four cross-cutting reviews for 2025–26: (1) product and service design, (2) outcome monitoring, (3) customer journey design, and (4) consumer understanding. Firms should expect deeper scrutiny of how they evidence these areas, particularly through data and testing.
Sector-specific priorities have also been highlighted. For asset and wealth managers, the FCA is focusing on model portfolio services, fair value assessments, and vulnerability identification. Complex products and suitability of advice remain under review, with an emphasis on preventing foreseeable harm
For wealth management, firms must demonstrate a clear understanding of their clients’ needs, risk profiles and vulnerabilities, including:
- Suitability of products: Align investment solutions with clients’ financial goals and risk appetite; avoid recommending inappropriate or overly complex products.
- Client journey mapping: Ensure firms have adequately identified and addressed pain points across the client lifecycle, improving experience and outcomes.
- Vulnerability awareness: Regularly reassess client vulnerability and ensure communications are clear, especially around fees, risks, and product features.
- Fair value and fees: Justify ongoing advice fees, avoid unnecessary trading, and ensure clients receive fair returns (e.g. on cash balances or securities lending).
- Governance and culture: Embed Consumer Duty into firm culture and governance, ensure senior leaders are accountable for delivering good outcomes.
- Data and MI: Strengthen data collection and management information to monitor outcomes and support vulnerable clients more effectively.
Alongside these refinements, the FCA’s September 2025 document signals further changes. This includes streamlining outdated guidance, piloting simplified guides for smaller firms, and planning consultations on distribution chains, client categorisation, and non-UK business exclusions in 2026.
Although the FCA removed the Consumer Duty Champion role in February, it has made clear that accountability remains unchanged. Boards and senior managers must still evidence good customer outcomes. Particularly for vulnerable clients, through robust data, early risk identification, and proactive support.
The 2025 SMCR reforms: What to know
In July 2025, the FCA, PRA, and HM Treasury launched the first phase of their two-phase SMCR reforms aimed at reducing regulatory burden by up to 50%. For asset and wealth managers, this presents both opportunities and challenges alike. The latest reforms, documented in CP25/21 focus on:
- Shifts from prescriptive regulation to principle-based accountability
- Greater reliance on internal governance structures and judgement
- More emphasis on documentation, transparency, and data-driven evidence to support decisions and mitigate enforcement risks
These developments are reshaping expectations around governance. Firms need to enhance their internal controls and ensure clear documentation of roles, responsibilities and decision-making processes. Not to mention, governance frameworks need to be robust enough to withstand increasing regulatory scrutiny.
Similarly, these changes are encouraging greater accountability among firms, with organisations having to ensure reasonable and well-evidenced decisions. Particularly with regards to interim appointments and certification. And with regulatory expectations also demanding greater evidence of data-driven decision-making, many firms are already turning to real-time monitoring, outcome tracking and data-backed assessments.
4 steps to meeting the Consumer Duty and SM&CR requirements
While the new reforms aim to streamline processes, they don’t reduce the accountability of boards and senior managers. Firms must still ensure that Consumer Duty and SMCR responsibilities are clearly assigned, monitored and reported. Additionally, firms must have processes in place to assess, test, understand evidence customer outcomes. They must be able to identify poor outcomes and take appropriate action.
To meet evolving expectations, there are four key areas firms need to be focusing on:
1. Governance and board accountability
Boards must be actively involved in overseeing Consumer Duty compliance. This includes integrating Duty metrics into board packs and ensuring senior managers understand their responsibilities under SM&CR.
2. Data and MI strategy
Firms must collect and analyse data that monitors customer outcomes, identifies potential harm, and to identify and support vulnerable clients. This means firms should be collecting data and MI such as, demographic insights, behavioural data, and feedback loops. For this to be accurate and effective, firms should have a clear data strategy and governance framework that improves data quality and defines how data is collected, managed and used across the organisation. This ensures consistency, accountability, accuracy and regulatory compliance. Outcome monitoring is now a core FCA priority. Firms must demonstrate how data is used to track and improve customer outcomes, not just collect it. This includes testing communications for clarity and evidencing interventions where harm is identified.
3. Client communications
Asset and wealth managers need to be reviewing all client communication touchpoints to ensure the Consumer Duty principles are being met—in that the service offered is clear, fair, and accessible. Firms should also prioritise developing customer understanding. This can be done through identifying communications that pose the greatest risk and document testing frameworks to evidence prevention and mitigation strategies.
4. Reporting—and evidencing it
Regulatory scrutiny is going to continue to ramp up, therefore calling for firms to have robust reporting frameworks. When it comes to creating annual board reports, firms must be able to demonstrate not only that they do deliver good outcomes, but also how they do this, where they have fallen short, and what they are doing to rectify these shortfalls. The intention and evidence of creating good outcomes will be crucial in meeting the Duty’s requirements.
Keeping up with the ever-evolving regulatory landscape can seem daunting, but with regulatory scrutiny rapidly increasing, the cost of non-compliance is far more serious.
At Davies, we understand the unique challenges faced by asset and wealth managers—from poor data quality and legacy systems to evolving client expectations—and we’re here to help you make the cultural transformation needed to build a resilient business.
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