The FCA has just published Enforcement Watch 2, its second enforcement newsletter, and this one focuses squarely on how the regulator is supervising and enforcing the Consumer Duty. If you skimmed the headline and moved on, you might want to reconsider. This document gives us the clearest picture yet of where enforcement attention is landing.
What Is Enforcement Watch?
The FCA launched this newsletter series to pull back the curtain on enforcement priorities. The first edition covered general themes. This second edition zeros in on Consumer Duty — the regulation that's been reshaping how advisers document, communicate, and evidence their work since July 2023.
Think of it as the FCA showing its working. They're telling you what they're looking for before they come looking.
The Three Areas Getting Attention
Enforcement Watch 2 highlights specific areas where the FCA is concentrating its supervisory efforts:
1. Outcomes Monitoring
The FCA wants to see that you're actually measuring client outcomes, not just assuming good advice leads to good results. This means having data that shows:
- Whether clients are achieving their stated objectives
- How different client groups are experiencing your services
- Where poor outcomes are clustering (and what you're doing about it)
For a typical IFA practice, this might look like tracking whether clients who took income drawdown advice are on course for their retirement goals three years later. Or monitoring whether clients in certain demographics are more likely to complain or disengage.
The FCA isn't expecting perfection. They're expecting evidence that you're paying attention.
2. Price and Value Assessments
This one keeps coming up because firms keep getting it wrong. The FCA has seen too many price and value assessments that amount to "we charge what the market charges, therefore it's fair."
That's not an assessment. That's an assertion.
A proper price and value assessment for an advice firm should consider:
- What service elements clients actually receive for their fees
- Whether the total cost (including platform charges, fund costs, and your fees) delivers value relative to outcomes
- How your pricing affects different client segments differently
If you're charging a percentage-based ongoing fee, a client with £500,000 pays five times more than a client with £100,000. Are they getting five times the service? The FCA wants you to have thought about this.
3. Consumer Understanding
The third focus area is whether clients actually understand what they're buying, what it costs, and what risks they're taking.
This goes beyond clear language in your suitability reports (though that matters too). The FCA is looking at:
- How you test whether communications have landed
- Whether vulnerable clients receive appropriate support
- How you handle situations where a client clearly hasn't understood something
One practical example: if a client signs off on a recommendation but then asks questions that suggest they didn't understand the risk profile, what happens next? The FCA expects you to have a process — not just a signature on a file.
What This Means for Enforcement
Enforcement Watch 2 makes clear that Consumer Duty breaches will be treated seriously. The FCA has stated it will use the full range of enforcement tools, including:
- Requirements to remediate affected clients
- Public censure
- Financial penalties
- Prohibition of individuals in serious cases
The newsletter references cases already under investigation, though without naming names. The message is clear: enforcement isn't theoretical.
Practical Steps to Take Now
Review your outcomes monitoring. If you don't have a system for tracking whether advice is working over time, build one. Start simple — even a spreadsheet tracking key metrics per client segment is better than nothing.
Stress-test your price and value assessment. Get someone outside your immediate team to challenge it. If the only defence of your pricing is "it's competitive," you have work to do.
Audit your client communications. Pick ten client files at random. Could a reasonably intelligent person who isn't a financial expert understand what was recommended and why? If you're not sure, ask someone outside the industry to read them.
Document your Consumer Duty thinking. When you make decisions about services, pricing, or communications, note down how Consumer Duty factored into that decision. This creates an evidence trail that matters if questions arise later.
The Bigger Picture
Enforcement Watch 2 confirms what many suspected: the FCA's initial period of "bedding in" Consumer Duty is over. The regulator has moved from education to supervision to enforcement.
This doesn't mean every firm will face investigation. It means the firms that haven't taken Consumer Duty seriously — the ones treating it as a paperwork exercise rather than a genuine shift in approach — are now at real risk.
For advisers who've done the work properly, this is actually good news. A regulator that enforces standards protects the reputation of the profession. It makes it harder for poor operators to undercut you on price while delivering substandard service.
The FCA is watching. Make sure there's something worth seeing.
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