Applying Consumer Duty and fair-treatment tests

A UK asset manager builds a landing pagelanding pageA standalone web page built for a single campaign goal, designed to maximise conversions by removing distractions and focusing visitors on one action.View full definition → for a new retail multi-asset fund. The headline: "Steady growth, built for your future." Legal clears the wording. Then compliance asks the question the Consumer Duty forces: "Steady for whom?" Not is the sentence true, but will the person who reads it end up better off. Four tests answer that: target market, fair value, comprehension, and treatment of vulnerable customers. Every piece of retail material has to pass all four, and you have to be able to show it did.

The four outcomes as marketing tests

The FCA's Consumer Duty has applied to open products since 31 July 2023 and to closed products a year later. It sets four outcomes: products and services, price and value, consumer understanding, and consumer support. Marketing owns part of each and all of consumer understanding.

The older standard, "fair, clear and not misleading" (COBS 4), judges the artefact: is this claim accurate, is it balanced? The Duty judges the result: did this material help a retail customer pursue their objectives, and did it avoid foreseeable harm? A page can be accurate line by line and still fail, because accuracy is not the same as being understood by the person who received it. Whether the material counts as a financial promotion at all, and who it may lawfully reachreachThe number of unique people exposed to your message in a given period. Unlike impressions, reach counts each person once, no matter how often they see it.View full definition →, is settled upstream in the perimeter lesson.

Free primer: FCA Consumer Duty.

Test 1: target-market assessment

Before the copy, the target market. MiFID II product governance introduced it; the Duty gave it teeth by holding the manufacturer responsible for what happens downstream.

For our multi-asset fund, a usable definition names attributes:

• Investor type: retail, non-advised, buying direct.
• Knowledge and experience: basic, understands that funds fall in value.
• Financial situation: able to bear loss of the amount invested.
• Risk tolerance: medium, say 4 on the 1 to 7 scale the KID uses.
• Objective and horizon: capital growth over five years or more.

Then the negative target market: anyone needing capital certainty, anyone with a horizon under three years, anyone buying for guaranteed income.

The failure mode

Target markets written so that nobody is excluded. If your definition spans "basic to advanced" knowledge and "low to high" risk tolerance, you have not defined a target market, you have described the adult population, and the three tests that follow lose their anchor. A definition that excludes nothing also gives the creative team nothing to push back with.

Distribution is the second-order consequence. A fund built for non-advised buyers fits an execution-only platform. Hargreaves Lansdown, the largest UK direct-to-consumer platform and therefore a commercial party in this chain, shows what "non-advised" does to the burden of proof. It kept Woodford Equity Income on its Wealth 50 best-buy list, with a management fee discount negotiated for its clients, until the fund was suspended in June 2019. The argument that followed, and the investor group claims after it, turned on whether a shortlist shown to people with no adviser works as a recommendation. The list was later renamed the Wealth Shortlist and its selection methodology rewritten.

The working rule: material aimed at people with no adviser carries the entire comprehension burden itself. Nobody downstream will explain it.

The Duty also expects manufacturers to pull sales data back from distributors and check who actually bought. If a meaningful slice of subscriptions arrives from outside the stated market, that is a marketing problem before it is a distribution one, and the campaign, not the fund, is usually what changed.

Test 2: fair value evidence

The price and value outcome asks whether the price paid bears a reasonable relationship to the benefits received. Marketing claims about value follow the assessment. They never lead it.

A worked check

Suppose the fund's ongoing charges figure (OCF) is 0.85% a year. Illustrative comparators, hypothetical, for teaching only: an actively managed multi-asset peer median around 0.90%, a passive multi-asset alternative around 0.25%.

On £10,000 that is £85 a year against £25, a £60 gap. The assessment has to justify that £60 with something specific: active asset allocation, a drawdown constraint, an outcome the passive fund does not target. If it cannot, value language stays out of the copy.

Two edge cases worth pricing in

Share classes. A fund can be good value in its clean 0.75% class and poor value in a legacy 1.50% class that pre-dates the Retail Distribution Review. Any campaign that touches existing holders sitting in the expensive class inherits that problem. "Great value" on a page reachable by those investors is a claim you cannot support.

Total cost of ownership. The customer pays your OCF plus the platform's fee. Hargreaves Lansdown charges around 0.45% a year on fund holdings up to £250,000 at the time of writing. Stack that on 0.85% and the retail investor is at roughly 1.30%, not 0.85%. Your assessment covers your share only; your marketing should not imply otherwise.

UK-authorised fund managers publish an annual Assessment of Value report. Marketing must never contradict it, and a "poor value" verdict inside that report while the website says "competitively priced" is the sort of contradiction a supervisor finds in an afternoon.

The cost of getting price and value wrong is not theoretical. St James's Place, the UK's largest advice-led wealth manager, restructured its charges in 2023, including removing early withdrawal charges on new bonds and pensions, and in February 2024 set aside £426m for potential client refunds relating to historic ongoing advice service records. Its shares fell sharply. The provision was about evidence of service delivered for fees charged, which is exactly the question the value test asks of a marketing claim.

Test 3: comprehension testing

Consumer understanding is the outcome most firms fake. A readability score is not a comprehension test. Flesch scores measure sentence length and syllables; they cannot tell you whether a reader finished the page believing the fund is capital-protected.

A real test asks representative people from the target market a small number of questions after they read the material: Could you lose money in this fund? How long should you hold it? What does it cost you a year? Set the pass mark before you test, and treat a failure as a rewrite instruction, not a footnote.

Two things this catches that a readability tool misses. First, a page written at reading age 9 that still uses "drawdown" or "annualised" without explanation. Many firms target a reading age of roughly 9 to 11 for retail copy, which is a floor, not a pass. Second, layout: readers answer "can I lose money?" wrongly when the risk statement sits below the fold or in grey 10pt while a green growth figure sits at the top in 48pt. Same words, different outcome.

Paid channelsPaid channelsVisitors arriving via paid ads or sponsored placements, where you pay a platform to display your message rather than earning visits organically.View full definition → are the awkward case. A search ad of 90 characters cannot carry a balanced presentation. The answer is not to bolt a truncated warning onto the ad; it is to write ad copy that makes no claim requiring balance, and to put the full picture on the landing page the click lands on.

Test 4: vulnerable-customer treatment

The FCA identifies four drivers of vulnerability: health, life events such as bereavement or job loss, resilience (low capacity to absorb a financial shock), and capability (low financial or digital literacy). Its Financial Lives research has repeatedly put the share of UK adults showing at least one characteristic at roughly half; treat that as an estimate and check the current edition.

At that scale, vulnerability is a lens over the mainstream message, not a segment you carve off.

What it changes:

Design that does not exploit. Countdown timers, pre-ticked boxes, "closing to new money on Friday". For a resilience-vulnerable customer, urgency framing can trigger a commitment they cannot afford. Under the Duty this is foreseeable harm, and a UX decision becomes a regulatory one.

Symmetry of prominence. Benefit and risk get comparable weight, in size, colour and position.

Support and exit, not just acquisition. The Duty covers the whole relationship. If your onboarding takes four minutes in an app and cancelling requires a posted form, the consumer support outcome fails, and that friction sits in marketing-owned journeys as often as in operations.

Channel accessibility. An app-only journey with no phone route fails a target market that includes low digital capability.

Putting the four tests in the gate

The machinery of sign-off (owners, versioning, evidence files, escalation) belongs to the launch lesson. What the Duty adds is that whoever approves signs for outcomes, not just wording. The approval itself sits with an authorised person holding the right permission, as the perimeter lesson sets out.

Six questions to answer before publication:

1. Does every claim fit the defined target market, and does nothing in the creative appeal to the negative target market?
2. Does each price or value claim trace to a line in the assessment, at the share class and channel in question?
3. Did the material pass a comprehension test with real people, and is the result on file?
4. Reading age, prominence symmetry, no pressure design, an accessible support route.
5. Does anything here go beyond or contradict the KID and prospectus?
6. Performance and risk claims follow the claim-level rules set out in the promotions lesson. The only question added here is whether the period and comparator chosen make sense for a five-year target holder.

Before and after

Before: "Steady growth, built for your future. Access your money anytime."

After: "This fund aims for capital growth over five years or more by investing across shares and bonds. Its value can fall as well as rise, and you may get back less than you invest. Designed for investors comfortable with medium risk."

Longer, less punchy, and the one that survives review, because the message and the product finally describe the same thing.

Key Takeaways

• A target market that excludes nobody is not a target market. Write the negative list first; it is what gives the creative team something to argue against.
• Value claims are downstream of the assessment, at the level of the share class and the platform the customer actually buys through.
• Readability scores are not comprehension tests. Ask real readers whether they could lose money, and record the answer.
• Roughly half of UK adults show a characteristic of vulnerability, so pressure design and buried risk statements are a mainstream failure, not an edge case.
• The Duty tests outcomes, not sentences. Accurate copy that leaves the wrong person invested still fails, and the £426m order of magnitude in the St James's Place provision shows what evidencing gaps cost.