On 4 March, the Financial Conduct Authority (FCA) published its first Regulatory Priorities report for the consumer investments sector, marking a clear shift in how the regulator communicates its expectations to firms. The new report replaces the FCA’s previous portfolio letters and forms part of a wider move to provide clearer, more consistent, and more targeted regulatory messaging across financial services.
For consumer investment firms, the message is clear: the FCA expects firms to be actively aligning strategy, governance and operating models to its priorities – not treating the report as background reading. The real message behind the FCA’s new Regulatory Priorities report is not simply what firms should focus on, it is how the regulator expects firms to demonstrate Consumer Duty outcomes in practice.
A new way of signalling regulatory expectations
The consumer investments report is one of nine sector‑specific Regulatory Priorities reports being introduced by the FCA in 2026. Together, these reports are designed to help firms better understand:
- where the FCA will focus supervisory attention,
- the key risks it sees in each sector, and
- the areas where it expects firms to take proactive action.
Importantly, the FCA has been explicit that firms should apply the priorities proportionately, based on their business model, products, and role in the distribution chain, but it also expects boards and senior management to be able to evidence how the priorities have been considered and addressed.
The FCA’s priorities for consumer investments
The FCA identifies four core priority areas for consumer investment firms in 2026.
- Building a stronger investment culture
A central theme of the report is the FCA’s continued focus on fair value and suitability, particularly as firms implement the Consumer Composite Investments (CCI) framework. The FCA expects firms to ensure that:
- products and services meet genuine consumer needs,
- costs and charges are appropriate and clearly disclosed, and
- consumers are supported to make informed decisions through clear, jargon-free communications.
This focus reflects a familiar FCA theme across other retail markets: fair value and suitability must be demonstrated in practice, not assumed from disclosure or consumer choice. In insurance, retail lending and retail banking, firms are already being challenged to show that prices, charges and product features remain reasonable throughout the customer lifecycle, supported by clear communications and outcomes‑based Consumer Duty monitoring.
The FCA is now signalling that consumer investment firms should expect similar scrutiny, alongside further changes to simplify investment advice rules and cost and charges disclosures. For many, this will mean revisiting long‑standing advice, guidance and disclosure approaches to ensure legacy practices do not undermine good consumer outcomes.
- Strengthening trust through governance and innovation
The FCA highlights concerns arising from rapid growth and consolidation in parts of the consumer investment market, including platforms and Model Portfolio Service (MPS) providers. In response, it plans further supervisory work focused on:
- governance arrangements,
- risk management frameworks, and
- the application of the Consumer Duty in complex operating models.
At the same time, the FCA continues to signal support for responsible innovation, including the use of AI and the development of new investment products. However, innovation is clearly framed as something that must sit alongside – not replace – strong controls, oversight and accountability.
- Securing good consumer outcomes across distribution chains
Consistent with its wider Consumer Duty agenda, the FCA will consult on clarifying how the Duty applies across distribution chains and continue reviewing client categorisation proposals. It also flags work on:
- new distribution channels, including guidance for “finfluencers”,
- outcomes for consumers in vulnerable circumstances, and
- improvements to regulatory data collection.
For many firms, this reinforces the need to move beyond narrow, firm‑centric interpretations of the Duty and to take a joined‑up view of customer outcomes, including where activities are outsourced or shared across multiple parties.
These expectations also align closely with the FCA’s approach in other retail markets such as insurance and consumer lending, where firms are similarly expected to evidence joined‑up Consumer Duty compliance across complex distribution chains, outsourced arrangements and shared customer journeys.
- Strengthening financial crime controls
Finally, the FCA reiterates expectations around robust systems and controls to prevent financial crime, including enhanced surveillance and effective reporting. While this may feel familiar territory, the inclusion of financial crime within the consumer investments priorities is a reminder that conduct risk and financial crime risk remain closely linked in the FCA’s supervisory approach.
What this means for boards and senior management
The Regulatory Priorities report is not a checklist exercise. Instead, it raises some fundamental questions that firms should be asking themselves, including:
- Can we clearly articulate which FCA priorities are most relevant to our business?
- Do our governance, MI and oversight arrangements demonstrate effective Consumer Duty compliance?
- Are we confident that legacy products, disclosures and distribution arrangements remain fit for purpose?
- Can we evidence how we monitor outcomes and act on emerging risks?
The FCA has also been clear that priorities may evolve during the year in response to market events or emerging harms, reinforcing the need for ongoing review rather than one‑off gap analysis.
Turning regulatory priorities into practical action
For consumer investment firms, the challenge now is translating high‑level regulatory messaging into practical, proportionate action. That typically means:
- refreshing Consumer Duty assessments and Board reports,
- stress‑testing governance and oversight frameworks,
- reviewing product and distribution arrangements through an outcomes lens, and
- ensuring MI genuinely supports decision‑making rather than retrospective assurance.
Firms that can clearly demonstrate alignment between strategy, customer outcomes and regulatory priorities will be best placed to meet the FCA’s expectations and to respond confidently to future supervisory scrutiny.
In summary
The themes set out in this Regulatory Priorities Report closely mirror the FCA’s supervisory priorities across other retail sectors, including insurance, retail banking and consumer credit, where the regulator has similarly focused on governance resilience, oversight of complex and outsourced operating models, and firms’ ability to evidence effective Consumer Duty outcomes in practice rather than on paper. In those markets, rapid growth, platform‑based distribution and increased use of technology have prompted the FCA to challenge boards on whether innovation is being matched by clear accountability, robust risk management and meaningful MI – a line of scrutiny the consumer investments sector should now expect to intensify.
How Square 4 can help
Square 4 helps consumer investment firms turn the FCA’s Regulatory Priorities into practical, evidence-based action. We support firms to strengthen investment culture and fair value, enhance governance and oversight in complex or evolving operating models, evidence good customer outcomes across distribution chains, and assure the effectiveness of financial crime controls. Our focus is on outcomes‑led Consumer Duty compliance, Board‑ready MI, and clear regulatory narrative that stands up to supervisory scrutiny.
If you have any questions or want to discuss how Square 4 can help, please contact us at hello@square4.com
Darren Fisher
Senior Advisory Director
