Consumer Duty moves from supervision to enforcement

The Financial Conduct Authority (“FCA”) has published the second edition of Enforcement Watch, providing valuable insight into how it is using the Consumer Duty to drive better consumer outcomes and where it is increasingly prepared to move from supervisory intervention to formal enforcement action. 

The publication offers a clear indication of the FCA's current priorities and highlights the growing regulatory risks facing firms that cannot demonstrate positive consumer outcomes. 

Nearly three years after the introduction of the Consumer Duty, the FCA considers firms to have had sufficient time to embed its requirements. While the regulator initially focused on helping firms understand and implement the new framework, it is now entering a more assertive phase. 

The FCA reports that it currently has 11 investigations examining potential Consumer Duty breaches, up from six investigations reported in the first edition of Enforcement Watch, published in January 2026. These investigations span a range of sectors, including insurance, wealth management, pensions, consumer investments, peer-to-peer lending and claims management.

A key theme throughout the publication is the FCA's emphasis on "assertive supervision" demonstrating that enforcement is only one part of the regulator's toolkit. 

The FCA explains that it frequently intervenes before opening formal investigations, using measures such as voluntary requirements (VREQs), own-initiative requirements (OIREQs), skilled person reviews and ongoing supervisory engagement. 

During the last financial year alone, the FCA states it undertook 382 supervisory interventions. 

The examples highlighted by the FCA demonstrate the breadth of issues capable of triggering regulatory intervention. These include concerns about conflicts of interest, inadequate consideration of vulnerable customers, poor value products, misleading promotions, weaknesses in governance and failures to monitor consumer outcomes effectively. In several cases, firms were restricted from taking on new customers or carrying out regulated activities while remedial action was undertaken. Some businesses ultimately exited the market altogether. 

The publication also provides important insight into how the FCA interprets the concept of "fair value". 

The regulator reiterates that value is not solely a question of price. A product may fail the Consumer Duty if it does not meet customers' needs, causes foreseeable harm, frustrates customer objectives or provides little meaningful benefit. The FCA makes clear that firms should be able to demonstrate not only that charges are reasonable, but that products and services deliver genuine value when viewed in the round. 

Several of the FCA's current investigations focus on operational failures and customer support deficiencies. Examples include delays in complaint handling, failures affecting customer access to account information, shortcomings in insurance claims processes and concerns regarding the information provided to consumers before purchase. The regulator also highlights investigations into claims management companies operating in the motor finance sector, underlining its willingness to investigate alleged misconduct even where supervisory action has already halted ongoing harm

What this means in practice

The latest Enforcement Watch sends a strong signal that the FCA increasingly expects firms to demonstrate, rather than merely assert, compliance with the Consumer Duty. 

Firms should ensure that governance, monitoring and record-keeping arrangements provide clear evidence of customer outcomes across all four Consumer Duty outcomes. 

Particular attention should be paid to value assessments, vulnerable customers, financial promotions and customer support processes.

Perhaps most importantly, the publication confirms that the FCA now views the Consumer Duty as an established regulatory standard. Firms that fail to identify and address consumer harm proactively may find themselves moving rapidly from supervisory engagement to formal enforcement action.