A continued tale of outcomes-based regulation: FCA consults on simplifying financial promotions rules for consumer credit
On 29 April 2026, the Financial Conduct Authority (FCA) published consultation paper CP26/15, in which it sets out proposals to streamline its financial promotions rules in Chapter 3 of the Consumer Credit sourcebook (CONC 3) by removing duplicative, outdated or overly prescriptive requirements in light of the Consumer Duty. The FCA is also exploring potential amendments to disclosure requirements in relation to the cost of credit, aimed at improving consumer understanding.
The FCA’s proposals mark the latest example in the regulator’s drive to move from a prescriptive to a more outcomes-based approach to regulation. Following a Call for Input in July 2024 on a review of FCA requirements after the introduction of the Consumer Duty, the FCA had committed in March 2025 (in Feedback Statement FS25/2) to such a review based on industry concerns about the “length, complexity and prescriptive nature of CONC 3”. CONC 3 has been largely unchanged since 2014 and the FCA considers that the introduction of the Consumer Duty as well as evolving ways in which customers interact with financial promotions and financial products warrant a review of these rules. CP26/15 delivers on the FCA’s commitment in two parts: (i) a Consultation Paper on financial promotion provisions in CONC 3 and (ii) a Discussion Paper on cost-of-credit disclosure, including Annual Percentage Rate (APR).
Firms undertaking retail credit-related activities whose communications are in scope of the proposals should consider their impact carefully. The direction of travel on CONC 3 means that firms should benefit from greater flexibility for relevant communications, but, as a result, heavier reliance will be placed on firms’ more outcomes-based assessments under general principles such as the Consumer Duty. The FCA acknowledges that some firms may initially find it more challenging to evidence compliance with their obligations and would need to exercise greater judgment in assessing whether communications comply with FCA rules. We have considered the balancing exercise between protection, proportionality and flexibility which the FCA is undertaking more broadly following the introduction of the Consumer Duty in a previous briefing.
The Consultation Paper: Simplifying CONC 3
The FCA proposes to remove provisions that "no longer add significant consumer protection value in light of the [Consumer] Duty", including those that restrict flexibility or hinder innovation and growth, and to consolidate or relocate guidance where doing so would improve coherence. However, the proposals do not amount to a wholesale change of the current rules. In particular, the FCA suggests preserving the general requirement for firms to ensure that in-scope communications are “clear, fair and not misleading” (in CONC 3.3.1R). The FCA considers this a key element of consumer protection and although the principle is also reflected in the Consumer Duty, the rule would be retained so that consumers remain able to bring a private action for breach of the rule, which is not available for breaches of the Consumer Duty.
Certain sections of CONC 3 are also outside the scope of the FCA’s review, such as rules on risk warnings for high-cost short-term credit (CONC 3.4) and financial promotions in relation to credit broking (CONC 3.7). Some of these may be considered by the FCA as part of other work.
The FCA’s proposed changes largely fall into three categories:
Removing requirements which are duplicative or superfluous under the Consumer Duty or the “clear, fair and not misleading” rule. The FCA has identified a series of provisions where broader, principles-based requirements deliver equivalent or higher standards, such that more specific CONC 3 requirements can be removed. In relation to the Consumer Duty, the FCA’s proposals place particular reliance in this regard on the consumer understanding outcome as well as cross-cutting obligations on firms to act in good faith towards retail customers, avoid causing foreseeable harm and enable and support customers to pursue their financial objectives. Proposed changes of this kind include the removal of (i) some guidance on the “clear, fair and not misleading” rule, (ii) restrictions on using certain expressions in financial promotions, such as "interest free" or "no deposit" and (iii) requirements to include certain statements in promotions where customers are required to enter into a contract for an ancillary service.
Removing outdated requirements. The FCA proposes to remove provisions that may no longer serve a practical purpose. These include guidance on the use of premium rate telephone numbers, a practice which is now generally prohibited.
Other amendments. CP26/15 contains further proposals to amend certain rules, including to adjust the requirements in relation to security so that disclosure is only mandatory where this is an inherent feature of the underlying product. Certain consequential amendments following other recent legislative changes are also proposed.
The FCA proposes that any final amendments take effect three months after they have been made.
The Discussion Paper: The future of cost-of-credit disclosure
The FCA is not proposing specific changes to its cost-of-credit disclosure rules at this stage, recognising that there is limited evidence and significant complexity around alternative options to the current requirements. Instead, it seeks to open a wider discussion that addresses three principal questions, informed by behavioural research conducted or commissioned by the FCA:
Do the Representative APR (broadly defined as the APR at or below which credit would likely be provided under at least 51% of the credit agreements entered into as a result of the promotion) and the triggers requiring its disclosure support consumer understanding of the cost of credit?
The FCA acknowledges that while the Representative APR can enable quick and easy comparisons across lenders, it has limitations in particular in relation to short-term loans, for which it can be distorted to figures far higher than the actual cost to consumers and could therefore be misleading. Similar distortions arise for credit cards with high annual fees. The FCA invites stakeholder views on other options, such as communicating the cost of a loan in pounds and pence or providing other cost metrics such as monthly repayments, total interest and total amount repayable.
Does the mandatory requirement to provide a representative example remain fit for purpose?
The FCA has received feedback that the representative example requirements are complex and difficult for consumers to understand and add cognitive load in formats such as social media channels and unnecessary time and therefore cost for radio and audio adverts. Stakeholders are therefore asked to submit views on whether such examples should continue to be required.
Is the current 51% threshold for determining a Representative APR appropriate?
The FCA notes that the 51% threshold has been criticised on the basis that a substantial number of consumers may not receive credit under the advertised rate, such that the disclosure of the Representative APR could be misleading and lead to adverse outcomes. The discussion paper sets out several policy options, including increasing the threshold from 51% to, for example, 66%, requiring disclosure of the maximum APR that could be offered, or requiring disclosure of the full range of APRs. It also invites views on whether the term "representative" could be omitted where only one APR is offered, or whether it should be replaced with other terms such as "typical" or "illustrative".
What does this mean for firms?
While largely framed as a streamlining exercise, CP26/15 has important implications for consumer credit firms.
Greater flexibility means greater requirements for judgment. The FCA states that it intends to reduce compliance costs for firms but maintain high standards of consumer protection. The proposed reforms shift the focus from demonstrating compliance against specific provisions to evidencing that communications deliver good outcomes for customers, which may require firms to adapt their compliance frameworks and to undertake more judgment-based assessments, although existing Consumer Duty frameworks can be leveraged.
The private right of action under CONC 3.3.1R remains available. The retention of the “clear, fair and not misleading” rule is a deliberate policy choice. The FCA makes clear that the CONC 3 review is not intended as a relaxation of the enforceability landscape.
Interaction with wider consumer credit reforms. The Government's parallel review of the Consumer Credit Act 1974 could result in further changes to information requirements, including pre-contractual disclosures. The FCA states that it will consider the impact of changes to financial promotion rules in its policy approach to the wider credit regime.
Reforms to cost-of-credit disclosures remain unclear. Potential future changes to required disclosures of Representative APRs and representative examples could have a material impact on the compliance lift needed for such disclosures. Affected firms may wish to closely follow any developments in this space or engage with the FCA at these early stages.
Social media and digital advertising. The FCA recognises that representative examples cause particular issues in social media advertising due to their additional cognitive load. The FCA’s exploration of alternatives may signal an openness to consider challenges created for new communication channels by existing regulatory requirements.
Next steps
Responses to both parts of CP26/15 can be submitted until 17 June 2026. The FCA will then aim to publish the outcome of the consultation later this year and consider next steps on the discussion paper based on the feedback received.
