As far as the UK Financial Conduct Authority is concerned everyone in the supply chain of a product should be responsible for the consumer impact of that product. Investment and financial advisers take note, because this is how the FCA will reach you, explain David Robinson and Simon Collins.

Since the Global Financial Crisis 14 years ago the march of regulation across the UK has been constant.

During that time the way the regulator has pressed its power on those it regulates, and those it does not, has evolved. Its latest move is an example of how it can reach all in the supply chain of a financial product as it aims to prove its powers to consumers and government alike in a long journey towards new regulation.

In 2021, the government announced the FCA would regulate buy now pay later (BNPL) firms. It was at this point that the regulator stuck its first flag in the ground.

Since then, and despite the fact that it doesn't regulate them yet, the regulator has found ways to reach out to these newer consumer finance firms. And to get to them it is going through those that it already regulates.

It is a principle that it has been building on with Consumer Duty. As far as the FCA is concerned everyone in the supply chain of a product should be responsible for the consumer impact of that product. Investment and financial advisers take note, because this is how the FCA will reach you.

Its first big move was to agree changes to BNPL contract terms in February 2022. And at this point its executive director of consumers and competition, Sheldon Mills, started nailing its intentions and its strategy, to the mast.

"We do not yet have powers to regulate these firms, but we do have powers to review the terms and conditions of consumer contracts for fairness, and have acted proactively to ensure that the BNPL industry adopts high standards in their terms and conditions."

Following up with an expansion of rules to buy now pay later firms, including affordability checks, the government and regulator have been putting three sheets to the wind as they sail towards deeper regulation of these firms.


The intention was, and still is, clear. With much written in the press about consumer debt, cost of living crisis and rapid inflation shrinking wages there is a desire to support customers, particularly vulnerable customers before there is a crystallisation of problems caused by overspending.

The belief is that by taking a truly holistic approach to the financial services products world it can mitigate the danger to consumers. The FCA believes the latest activity can help do this and investment and financial advisers have to take note with the increasing interest the regulator has with ongoing advice fees.

Furthermore, by clamping down on what it sees as potentially illegal, unfair or misleading financial marketing with its latest announcement, the FCA is navigating towards further regulation. And it would seem that the regulator is using its arsenal of tools including already regulated firms as a way to reach the mark on the map set for it by the government.

But this latest announcement wasn't just for the ears of the unregulated.


The FCA wants to prevent regulated firms from reducing their own ability to approve marketing tools to ‘rubber stamping' for non-regulated firms. It wants firms to do the due diligence, ask themselves if the marketing or advert is helpful and clear to consumers as well as place greater accountability on senior management in regulated firms.

In some ways this is not dissimilar to the recent Appointed Representatives enhanced supervisory expectations on principal firms. Investment professionals and financial advisers are clearly part of this group and are more interconnected than many, being right in the engine room of financial products.

More evidence to be aware of is in a recent speech from Therese Chambers director of consumer investments which was a further signal that the FCA desires to be more proactive where it can.

There is some good news. Some parts of the financial services world will have already had the opportunity to lay down foundations for the requirements of Consumer Duty.

Asset managers, for instance, will have been given a small head start by MiFID II. The Product Intervention and Product Governance Sourcebook (PROD) will have also had a similar effect for investment managers and financial advisers.

However, this is only a head start. In these stormy economic seas where mortgage rates are increasing, consumers are putting more on credit cards (increase from £0.1bn to £0.4bn in October 2022) and victims of online shopping scams lost an average of £1,000 during the Christmas period in 2021, the FCA is sending all the signals to protect consumers from harm.

With all these factors at play, it was almost inevitable that the FCA would make an announcement to ensure that promotions are clear, fair and not misleading and most importantly not ‘rubber stamped' by regulated firms.

For those who have been watching, this is just the next pin in the map towards regulation of the relatively new firms in financial services. The only questions advisers are going to be asked are what is next, how are we affected and to what extent do we need to know where our own paper trail ends?

David Robinson and Simon Collins are regulatory directors at Konexo

This comment was first published in Professional Adviser.