The FCA’s latest discussion paper, DP25/3: Expanding Consumer Access to Investments, signals a major shift in how the regulator intends to reshape the retail investment landscape. Against the backdrop of consumer low financial and business low data literacy, rising digital investing behaviours, the Labour government growth agenda and persistent misalignment between consumer risk appetite and actual investment choices, the FCA is seeking a regulatory framework capable of supporting informed risk-taking while reducing consumer harm.
The paper highlights two themes that will dominate the next phase of regulatory evolution:
(1) clearer, more consistent rules across similar products and channels, and
(2) stronger expectations that firms use data to evidence consumer understanding and good outcomes. This is where the future of RegTech becomes central.
Key Themes in DP25/3
- A redesigned regulatory framework for a new investing reality
Retail investors now access markets through trading apps, fractional ownership, tokenised assets, and model portfolio services. This is a far cry from the era when the COBS rulebook was written. The FCA notes:
- A surge in non-advised digital platform use — 11% of adults now invest via such platforms
- Heavy use of digital engagement practices (DEPs), which can distort risk-taking
- A mismatch in consumer risk appetite vs actual behaviour, with 26% of high-risk investors stating low risk appetite (Financial Lives Survey 2024)
The regulator’s concern is clear: technology has changed investing far faster than rules have evolved.
This also has a relationship with firm evolvement where we now have a market dominated by mergers and acquisitions and the regulatory risks here are clearly covered by the recent FCA multi firm consolidation review covering how governance, risk and compliance needs to scale along with business services and operations.
- Moving toward consistent, risk-based regulation
Currently, similar products can be treated very differently. For example:
- CFDs face strict limits and warnings
- Leveraged ETPs with comparable risk features do not
- Model portfolios resemble funds but lack consistent and clear disclosures
The FCA is considering a risk-and-return-centred model, rather than product-type classifications. For advisers, this could reduce confusion but also increase the compliance burden as firms must demonstrate why a recommendation or guidance approach is suitable across a blended product landscape.
- Strengthened financial promotions and appropriateness testing
The FCA questions whether current frictions (cool-off periods, personalised warnings, appropriateness tests) work effectively — or need tightening.
It also warns that FinProm exemptions are outdated, letting consumers self-certify out of core protections too easily.
What This Means for the Retail Advice Sector
Advice and guidance boundaries will blur — and demand scalable compliance
With the Consumer Duty, client vulnerability and now the new Advice–Guidance Boundary Review paving the way for new forms of support, advisers will need evidence-rich, configurable processes that show:
- compliance with Consumer Duty client understanding and value for money
- risk alignment
- consistent treatment across similar products
Suitability, disclosures and MI must become more data-driven
A regulator focused on risk-aligned behaviour will expect:
- granular MI on consumer journeys
- real-time identification of foreseeable harm
- automated surveillance of digital engagement practices
- consistent risk scoring across products (e.g., funds vs model portfolios)
RegTech will become a necessity, not an optional enhancement
To operate in this future environment, firms will increasingly rely on:
- automated appropriateness/suitability engines
- behavioural data analytics
- product governance dashboards
- rules-aware financial promotion approval systems
- integrated Consumer Duty and Training and Competence monitoring frameworks
The FCA’s trajectory is unmistakable: a data-led regulator requires data-led firms.
The Bottom Line
DP25/3 sets the stage for the biggest recalibration of retail investment regulation post the Consumer Duty. For advisers, product manufacturers and distributors, the message is clear: the future will demand consistent, evidence-based, technology-enabled compliance.
Those who invest early in smart GRC and RegTech capabilities will not only meet existing and new regulatory expectations — they’ll deliver better and validated client outcomes in a world where informed risk-taking is finally the goal.
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