Enforcement Watch 2

It will soon be three years since we introduced the Consumer Duty. In this newsletter, we spotlight how we are using it to improve consumer outcomes through assertive supervision and our enforcement powers.

From the outset, we recognised that firms would need some time to embed the Duty, and that we did not expect to use our enforcement powers immediately.

Three years in, and we now have 11 investigations examining potential breaches of the Consumer Duty. We opened our first investigation in August 2024, and they have steadily increased since then.

Our approach to the Duty is much broader than using our enforcement powers.

We support firms by publishing examples of good practice and areas for improvement. These publications are often the result of multi-firm work, where we assess several firms against a thematic area. Results from recent work can be found on our webpage.

Another important tool in supervising the Consumer Duty is the requirement to undertake a s166 or skilled person review. Since it was introduced, we have commissioned around 30 skilled person reviews which reference the Duty. 

Principle 12 reflects our expectation that firms consider customer outcomes and put customers’ interests at the heart of their activities.

It should prompt firms to ask questions such as ‘Am I treating my customers as I would expect to be treated?’ or ‘Are my customers getting the expected outcomes from my products and services?’.

Firms should continually challenge themselves to make sure their actions are compatible with their customers’ interests and financial objectives. We will act where we find this has not happened. 

Most firms do the right thing and never experience enforcement action. However, we step in where we have concerns. We call this assertive supervision.

Our assertive options range from a conversation to the imposition of requirements. Where our interventions are sufficient to address the harm, there may be no need for a formal enforcement investigation.

To give a sense of the scale, last financial year, we intervened 382 times.

In this edition, we use the Consumer Duty to help shine a light on the threshold between assertive supervision and enforcement action. 

If immediate action is needed to stop ongoing harm, we will intervene. We may use formal powers such as imposing requirements on firms, but we don’t always need to, to achieve the right outcome. Interventions are often the starting point for firms to remedy their issues or exit the market if they cannot. Once we have intervened, we continue our supervisory engagement with the firm including ensuring that any deficiencies in the firm are remedied and that the restrictions put in place are complied with.

Our actions help consumers navigate their financial lives whilst supporting our strategic priority to fight financial crime.

Some of the recent ways we have intervened and used the Consumer Duty or rules that work alongside it include:

• Reviewing insurance firms’ valuation of vehicles, with around 270,000 motorists expected to receive £200m in redress.
• Inviting a financial advice firm to sign an asset restriction voluntary requirement (VREQ) and an undertaking to inform clients who had purchased shares in the firm. It appeared that the firm had not properly considered conflicts of interest, client categorisation and the Consumer Duty. The firm agreed to buy back the shares in line with a Financial Ombudsman Service decision awarding redress to one of the shareholders.
• Inviting a wealth management firm to sign a VREQ stopping it from conducting regulated activities due to concerns about the firm’s compliance with the Consumer Duty, among other issues. We were concerned that the firm may not be acting in good faith towards retail customers and that it may not be avoiding causing foreseeable harm. We continue to engage with the firm to understand the actions they intend to take to address our concerns and how this will be monitored.
• Inviting a fund manager to sign a VREQ restricting it from accepting new investors or additional investor capital, launching or managing new funds, and taking fees, charges or expenses from the assets of funds it already managed. The firm had been unable to show it was delivering fair value to consumers or actively monitoring consumer outcomes. The firm is now in liquidation. 
• Inviting a wealth management firm to sign a VREQ preventing it from accepting new retail clients. We identified Consumer Duty related concerns, including whether it had appropriately considered its influence on retail client outcomes in the distribution chain and was appropriately supporting vulnerable clients. Following our intervention, the firm is restructuring its business and has reduced its exposure to higher risk business lines.
• Inviting a housing disrepair CMC to sign a VREQ to cease promotions and commission an independent review of its marketing, systems, and controls to mitigate risks of consumer harm and improve outcomes. We were concerned by the firm’s repeated apparently non-compliant and potentially misleading financial promotions, including failures to clearly disclose free alternatives and fees, and misuse of the firm’s regulatory status. Following our intervention, we continue to engage with the firm in respect of remedial actions and its financial promotions compliance.
• Requiring a CMC to stop conducting regulated activities with immediate effect, due to concerns that the firm was not acting honestly and fairly towards its customers. The CMC specialised in claims submitted for alleged breach of contract or misrepresentation by companies which had installed ‘spray foam’ in customers’ homes. We were concerned that the firm’s customers were receiving unfair outcomes, including paying for removal that may not have benefited them and claims being rejected following potentially false or misleading documents and representations by the firm. On completion of the actions required under the Own Initiative Requirement (OIREQ) the firm applied to cancel its permissions and is no longer authorised.
• Providing feedback to a CFD trading platform on its Consumer Duty compliance which led it to stop accepting client introductions from two unauthorised introducers. The unauthorised firms shared common control with the CFD trading platform and provided CFD training and software which gave investors a false sense of possible returns. We were concerned that by receiving business from these firms, the CFD trading platform was failing to act in good faith by seeking to manipulate or exploit customer biases to create demand. Our supervisory strategy for CFD firms includes continued focus on their compliance with the Consumer Duty. In November 2025 we published the findings of a multi-firm review of CFD firms’ delivery of the ‘Price and Value’ outcome. We are following up with CFD firms on these findings.

We usually publish VREQs on the Financial Services Register for reasons of transparency and consumer protection. We may remove the restrictions once the issues are resolved.  

We almost always publish OIREQs, unless there is a strong reason not to, such as where a firm exercises its right to challenge an OIREQ in the Upper Tribunal and makes a privacy application.

We open investigations where our Supervision team has detected serious misconduct and we consider an enforcement investigation necessary, proportionate, and likely to create impactful deterrence across the industry.

In assessing whether to open an enforcement investigation, we consider factors including our regulatory priorities, the seriousness of the misconduct, the harm (or potential harm) it has caused, and whether other regulatory responses might be more effective.

In the first Enforcement Watch, we reported that we were investigating 6 matters involving potential Consumer Duty breaches. We now have 11 open operations.

The 11 open operations include investigations in the insurance, pensions, wealth management, consumer investments, peer-to-peer lending and claims management sectors.

In several cases, we are investigating whether consumers received fair value for a product or service in line with PRIN 2A and/or our PROD Rules which work alongside the Consumer Duty.

Fair value is about more than just price. A product or service that doesn’t meet any of the customer’s needs, causes foreseeable harm, or frustrates their objectives, is unlikely to offer fair value whatever the price. A product or service that has negligible or no obvious benefit for consumers is unlikely to provide fair value. And firms cannot act in good faith if they knowingly manufacture or distribute poor value products or services.  

In some investigations, we are looking at whether firms have properly assessed whether the price consumers paid was reasonable compared to the overall benefits.

But we are not only interested in price and value. The different parts of the Consumer Duty often overlap, and a product or service that does not meet its customers’ needs, may fall short of the Duty in several ways.

We may look at:

• whether the product was designed with its target market in mind (the product and services outcome) 
• where it doesn’t meet the target market’s needs and whether it delivers fair value (the price and value outcome)
• whether the features of the product or service, including benefits and exclusions, were made clear to customers before, during and after sale to help them make an informed choice about purchasing or continuing with the product or service (the consumer understanding outcome)
• what support was given to customers when things went wrong (the consumer support outcome).

We expect firms to hold themselves to high standards. Firms should work to identify and prevent harm from occurring, and provide evidence of good consumer outcomes.

We are pragmatic in our approach to the Duty and where firms do the right thing, we will work with them. However, we will not hesitate to take enforcement action where necessary.

We all have a part to play in creating an environment in which consumers and firms thrive.