For many consumer credit firms, financial promotions have traditionally been one of the most prescriptive areas of regulation. Compliance often meant working through detailed rules, ensuring mandatory wording appeared in the right place and confirming that disclosures met the requirements of the Consumer Credit sourcebook (CONC).
That approach may be about to change.
The Financial Conduct Authority’s recent consultation on reviewing the financial promotions rules for consumer credit proposes removing a number of outdated or duplicative requirements within CONC 3, recognising that many of these expectations are now addressed through the Consumer Duty. On the surface, this appears to be a welcome simplification of the Handbook. In reality, it signals something much more significant.
A shift from prescription to judgement
The consultation reflects a wider trend that has been developing since the introduction of Consumer Duty.
Rather than relying on increasingly detailed rules, the FCA is placing greater emphasis on firms exercising sound judgement and demonstrating that customer communications genuinely support good outcomes. The objective is no longer simply to comply with a prescribed set of requirements. It is to show that customers receive information that is clear, useful and enables informed decision-making.
For many firms, that represents a significant cultural shift.
Detailed rules can be followed. Judgement has to be evidenced.
Marketing and compliance can no longer work independently
Financial promotions are no longer solely a compliance responsibility.
Marketing teams, product owners and compliance functions increasingly need to work together from the outset to ensure communications reflect both regulatory requirements and customer needs.
The questions firms should now be asking extend well beyond whether mandatory wording has been included.
- Does the promotion genuinely help customers understand the product?
- Could key information be misunderstood?
- Is the balance between benefits and risks appropriate?
- Most importantly, could the business explain why it believes the communication delivers good customer outcomes?
Those are questions that require governance, challenge and evidence rather than a simple checklist.
An opportunity to review governance
The consultation should not simply prompt firms to review advertising templates.
It presents an opportunity to reconsider how financial promotions are designed, approved and monitored across the organisation.
Approval processes should encourage meaningful challenge. Quality assurance should assess customer understanding rather than technical compliance alone. Board reporting should provide assurance that communications continue to support good customer outcomes and identify emerging risks where customer behaviour or complaint trends begin to change.
In other words, governance should become just as important as the promotion itself.
The ALPH Legal & Compliance Perspective
At ALPH Legal & Compliance, we see this consultation as another example of the FCA moving from detailed prescription towards outcomes-based supervision.
The firms that will respond most successfully are unlikely to be those relying on increasingly detailed approval checklists. They will be the firms that build robust governance around marketing, compliance and customer communications, enabling them to demonstrate thoughtful decision-making as well as regulatory compliance.
As the FCA continues to simplify aspects of the Handbook, expectations around judgement, governance and customer understanding will only increase. For consumer credit firms, simpler rules do not mean easier regulation. They mean higher expectations, greater accountability and a stronger focus on evidencing why the right decisions have been made.
ALPH Legal & Compliance can assist with all aspects of your business’ compliance needs, whether that be compliance structure and policy, internal/external audit, business and regulatory change support, authorisation, supervision or just some general expert advice and guidance!