Practical challenges – Navigating the FCA’s latest phase of Consumer Duty

Sarra Slegg, Business Development Support Manager at Sparrows Capital, outlines how the FCA’s latest Consumer Duty phase shifts the focus from delivering good client outcomes to evidencing them, increasing reporting demands while reinforcing the role of structured investment frameworks in supporting consistency, value for money and regulatory scrutiny.

The FCA’s latest phase of Consumer Duty makes one thing clear. The focus is shifting from doing the right thing to proving it. But for financial advisers already balancing client care, compliance, and commercial reality, the challenge isn’t just regulatory. It’s practical.

The FCA has made it plain that the next phase of its supervisory work will be around evidencing outcomes. It’s not enough to say clients are getting good results.  The regulator now expects advisers to show how those outcomes have been measured, monitored, and maintained.

This is an important shift because it recognises that advice isn’t static. Advisers have always understood that financial planning is a process, not a transaction. But evidencing that process adds another layer of complexity to a profession already balancing time, technical skill and business sustainability.

For many, this will feel like another reminder that they are being asked to do more with the same number of hours in the day. Keeping on top of evolving client needs, ensuring value for money, documenting every suitability decision, maintaining contact and service levels is all part of the adviser’s role. And now, the requirement to produce hard evidence of “good outcomes” is moving from theory to expectation.

Yet, if we look past the compliance weight, there is something constructive in the FCA’s intent. The shift from prescription to proof allows advisers to demonstrate that consistent, disciplined, client-centred investment management isn’t just a regulatory obligation, it’s what high-quality advice has always aimed to deliver.

But with this heightened regulatory challenge, it’s no wonder that outsourced investment frameworks, such as model portfolios, are beginning to play an increasingly valuable supporting role. They are not a shortcut, nor a substitute for advice. Rather, they provide a transparent, governed process that helps advisers evidence how client portfolios are managed, reviewed and aligned with stated objectives.

Many advisers already use model portfolios precisely because they bring order to a complex task. They provide consistency across client cohorts while still allowing for personalisation through the advice process. The adviser remains in control of client understanding, goal setting and suitability, the parts of the job that depend on human judgment and empathy, while relying on an investment framework that can stand up to regulatory scrutiny. In practice, that means fewer ad-hoc investment decisions, less risk of inconsistency between clients, and a clearer audit trail when the time comes to evidence value and outcomes.

The FCA’s “good outcomes” agenda isn’t just about performance. It’s about value for money, appropriate risk and ongoing suitability. For advisers, that means showing that clients receive fair value for what they pay, not necessarily the cheapest option, but one that demonstrably delivers what it promises. Having access to transparent reporting on performance, risk metrics and costs, as model portfolios typically provide, helps advisers communicate that balance to clients and regulators alike.

A key element of the Consumer Duty that resonates with advisers is preventing foreseeable harm, which stems not from product failure, but from human behaviour.  Whether that’s clients reacting emotionally to volatility or misunderstanding the role of risk in achieving long-term goals. Advisers play a crucial role in guiding them through these pitfalls. Structured investment solutions can support that effort by imposing discipline and reducing the urge to chase returns. Ultimately, it’s the blend of structure and professional guidance that helps prevent harm.

Seen in this light, the FCA’s insistence on evidence can be reframed as a shared goal rather than an external pressure. Advisers want to show their clients that their advice works. They want to demonstrate that their fees represent real value. They want to know that the investments they’ve recommended are performing as intended and aligned to clients’ changing circumstances. The regulator simply wants those same things expressed in data and documentation.

Still, there’s no denying that evidencing outcomes takes time. Time that could otherwise be spent deepening client relationships. The more advisers can rely on professional, well-governed structures to handle the monitoring, reporting and rebalancing of investments, the more they can focus on what only they can do: helping clients achieve their wider long-term financial goals.

The FCA’s new expectation doesn’t change what good advisers are already doing, but it does make the job more data-driven. That isn’t a threat to advice but a validation of it. Clients, regulators and advisers all benefit from clarity, consistency and accountability.

Ultimately, the practices the FCA is calling for are already a fundamental part of how good advisers operate. They diligently monitor client progress, regularly review suitability, and consistently look for evidence of value at every client meeting. What’s shifting is the level of formality now required in recording and presenting these habits. Adopting well-defined investment structures can help make this process more streamlined, credible, and straightforward to evidence.

Advice, at its best, already delivers measurable good outcomes: financial security, peace of mind, and resilience in the face of uncertainty. What the regulator now asks for is a clearer, more consistent way to demonstrate those outcomes. For advisers, that’s not a new skill. Rather, it’s a more structured expression of what they’ve always done well.

By Sarra Slegg, Business Development Support Manager, Sparrows Capital