The Financial Conduct Authority (“FCA”) is reshaping the future of consumer credit promotions. With the publication of Consultation Paper CP26/15, the regulator has signalled a major shift away from prescriptive disclosure requirements towards a more outcomes focused approach centred on the Consumer Duty principles and enhancing customer understanding.
For lenders, brokers and consumer credit firms, this represents a significant change in how firms design, approve and monitor financial promotions in practice.
What is CP26/15?
The FCA’s consultation proposes changes to the financial promotions rules in CONC 3, removing requirements it considers outdated, duplicative or unnecessarily restrictive. Instead of prescriptive rules, firms would be expected to rely more heavily on the Consumer Duty’s consumer understanding outcome to ensure communications are clear, fair and not misleading.
Alongside the proposed rule changes, the FCA is also opening discussion on whether current approaches to disclosing the cost of credit, particularly the use of Representative APRs, genuinely help consumers make informed decisions.
This includes reviewing:
- Whether Representative APR remains effective;
- Whether mandatory representative examples improve understanding; and
- Whether the current 51% threshold remains appropriate.
An Outcomes Focused Approach:
A key theme throughout the consultation is regulatory simplification. The FCA acknowledges that some existing financial promotions requirements may no longer reflect modern customer journeys or digital communication methods.
Rather than relying on lengthy mandatory wording or rigid formatting rules, firms will increasingly be expected to exercise judgement and demonstrate that communications genuinely support customer understanding.
However, greater flexibility does not mean reduced scrutiny. Firms must also provide stronger evidence that financial promotions lead to good customer outcomes and do not create foreseeable harm, in line with the Consumer Duty expectations under PRIN 2A of the FCA Handbook.
Importantly, the FCA has confirmed that the overarching requirement for communications to be “clear, fair and not misleading” under CONC 3.3.1R will remain in place.
Consumer Understanding:
The FCA’s consultation reflects a wider regulatory trend under the Consumer Duty, moving away from “tick-box compliance” towards measurable consumer outcomes.
Research highlighted that many consumers struggle to understand APR disclosures, despite relying on them when comparing products. This raises important questions for firms when assessing financial promotions:
- Are the disclosures genuinely helping consumers?
- Do customers understand the true cost of borrowing?
- Are communications designed for clarity or simply regulatory completeness?
For many firms, this may require a significant rethink of how financial promotions are drafted, tested and monitored across modern websites, apps, social media and digital customer journeys.
Digital Communications:
The FCA’s review also reflects the reality that consumer engagement with credit products increasingly happens through short-form digital content, mobile applications and social media channels. Traditional disclosure-heavy approaches may no longer support effective customer understanding in these environments.
Instead, firms may need to adopt more targeted, layered and user-focused communication strategies that align with customer behaviours and technological developments.
This creates both opportunity and risk. Firms that invest in smarter and clearer communication strategies may improve customer trust and engagement, while firms that fail to adapt may face increased regulatory scrutiny.
Key Takeaways:
The FCA’s proposed changes signal a clear move towards a more outcomes-focused approach to consumer credit promotions, with greater emphasis on customer understanding under the Consumer Duty. While firms may benefit from increased flexibility in how they communicate with customers, they will also face greater accountability in demonstrating that promotions deliver good consumer outcomes in practice.
Key areas firms should focus on include:
- Ensuring financial promotions are clear, fair and not misleading;
- Demonstrating that customers genuinely understand the cost and risks of credit products;
- Reviewing whether existing disclosures and digital journeys support informed decision-making;
- Strengthening testing, monitoring and governance frameworks; and
- Considering the needs of vulnerable customers across all communications.
How Can Complyport Help:
The FCA’s proposed reforms to consumer credit financial promotions signal a significant shift towards a more outcomes focused regulatory framework based on the Consumer Duty. Firms will need to demonstrate not only that communications comply with the rules, but also that they actively support consumer understanding and fair outcomes.
Complyport provides specialist regulatory support to help consumer credit firms strengthen their financial promotions governance and Consumer Duty frameworks. Our experienced team can assist with:
- Consumer Duty Implementation Support: Helping firms embed Consumer Dity requirements into financial promotions processes, customer journeys and governance frameworks.
- Financial Promotions Review: Reviewing consumer credit financial promotional materials, websites, digital customer journeys and customer communications to ensure they are clear, fair and not misleading.
- Consumer Duty Monitoring Frameworks: Supporting the development of monitoring and MI frameworks to evidence customer understandings, identify risks and demonstrate good consumer outcomes.
- Trainings: Delivering tailored training programmes to help compliance, marketing and senior management teams understand evolving FCA expectations around consumer understanding and financial promotions.
- Compliance Governance Reviews: Strengthening firms oversight arrangements between marketing, compliance and senior management review functions involved in financial promotions.
Speak to a Compliance Expert
If your firm requires support reviewing financial promotions, strengthening compliance controls or understanding FCA expectations, Complyport’s specialists can help.
Contact Complyport today to book a meeting with one of our Subject Matter Experts and ensure your marketing activities remain compliant in an increasingly scrutinised regulatory environment.
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