The FSCA has published the final version of a Conduct Standard that sets baseline requirements for financial institutions that provide consumer financial education (FE).
Conduct Standard 1 of 2025, “Requirements for financial institutions providing financial education initiatives”, applies only to financial institutions that provide FE.
The Conduct Standard comes into effect 12 months after the date of publication, which was 26 March 2025. The Authority believes this will give financial institutions enough time to set up the necessary arrangements and controls to meet the Standard’s requirements.
In the Statement of Need, the FSCA said the Conduct Standard will support the Authority’s mandate to protect financial customers by providing them with FE programmes, while promoting financial literacy and the ability of financial customers to make sound financial decisions.
Stakeholders’ concerns
The Statement of Need sets out the FSCA’s responses to concerns raised by stakeholders since the Authority published a Discussion Paper in 2020 that put forward a variety of proposals on FE programmes.
In response, stakeholders said financial institutions might need additional resources to comply, along with mandated governance sub-committees and more time to bring FE initiatives to market. However, they also saw a silver lining: the push for more intentional monitoring and evaluation and needs-based assessments could lead to higher-quality consumer education material. At the same time, they cautioned that the requirements might result in fewer, costlier initiatives with less reach, although these could have a deeper impact on specific groups.
To obtain a clearer picture, the FSCA sought detailed feedback during a public consultation process, receiving input from 15 commentators. Many expressed concerns about requirements that are too onerous, such as the need for systems to track outcomes and the expertise required for content developers. They worried that smaller institutions might face barriers to entry because of the complexity and cost, potentially leading them to abandon FE initiatives altogether.
Costs take centre stage
Costs emerged as the major issue. Of the 12 commentators addressing cost implications, 10 predicted an increase in compliance costs because of new demands for data, monitoring, evaluation, and reporting. Some warned these costs could be prohibitively expensive, reducing the number of available programmes.
One commentator noted that any increased costs may push a programme to become no longer financially viable, and some very valuable programmes may then cease to run.
All 11 that commented on operational costs agreed that expenses would rise, heightening the risk that financial institutions might stop offering FE initiatives.
A question of fairness
Another concern was fairness. Stakeholders pointed out that the Conduct Standard might create an unlevel playing field because non-financial institutions providing FE initiatives would not face the same rules as their financial counterparts.
Despite these challenges, there was some optimism. Half of the eight commentators that addressed the impact on customers believed the Conduct Standard could lead to an improved standard of financial education for customers.
The Authority responds
The FSCA said it noted the concerns, particularly around requirements such as measurability (effectiveness and impact), monitoring and evaluation, which could make FE initiatives unviable for some because of cost increases and create barriers for smaller institutions.
However, the FSCA believes these risks can be managed. It highlighted two solutions: a proportional application of the requirements, allowing smaller institutions to adopt simpler approaches based on their nature, size, complexity, and risk profile, and a more flexible measurability standard tailored to each institution’s circumstances.
On the issue of an uneven playing field, the FSCA acknowledged the disparity but downplayed its significance, stating that improving the quality of FE initiatives provided by financial institutions will already go a long way towards better consumer education. It also noted that non-financial institutions working for financial institutions are “indirectly regulated” through the Conduct Standard.
What is ‘financial education’?
The final Conduct Standard refines the definitions of “financial education” and “financial education initiative” following input from the public consultation process. These definitions are essential because they outline which activities are regulated, ensuring that financial education efforts are consistent and meaningful for consumers.
During the consultation process, stakeholders raised several questions about the initial definitions. Some felt they were not broad enough, while others called them too vague. There was also debate about whether the Conduct Standard applies to both awareness campaigns and interactive programmes, with concerns that awareness efforts might not meet the detailed data requirements. Specific examples were brought up, such as whether retirement fund newsletters explaining member benefits or articles on financial services providers’ websites would be included. As the document notes, commentators asked about activities such as communication by a retirement fund to members concerning the specific benefits within a specific retirement fund and “articles written by an FSP where it is hosted on an FSP’s website or a publication in a magazine.
Key clarifications
The FSCA acknowledged that defining financial education is difficult because the types of FE initiatives that can be provided are broad. To address this, the definitions were initially drafted widely but refined based on feedback. The goal was to ensure they cover relevant activities without being overly restrictive.
Two main distinctions shape the definitions:
- No product-specific focus: The Conduct Standard excludes activities aimed at marketing or creating awareness surrounding a specific financial product/service provider or its specific products. This keeps the focus on general education rather than promotion.
- No one-time actions: Random or once-off efforts, such as publishing a single article, do not count. Instead, the definitions target systematic efforts. For example, a “financial education programme” involves “an officially organised system of FE-driven activities”, while an “initiative” requires “some form of systematic planning/process”, such as an awareness campaign.
The FSCA believes the updated definitions address stakeholders’ concerns. However, it remains open to providing more guidance if confusion arises during implementation, stating, “Should there be further ambiguity when implementation of the Conduct Standard occurs, the FSCA will consider issuing more specific guidance.”
Consistency and flexibility
The Conduct Standard requires financial institutions that provide FE initiatives to uphold “appropriate standards of behaviour” and establish governance and oversight when creating and managing FE activities. The aim is to create a uniform standard across the sector.
However, the FSCA recognises that not all institutions are the same. The Conduct Standard allows for “proportional application”, which means the requirements can be adjusted based on an institution’s size, complexity, or the specific audience it serves, as noted in clause 2(3).
Breaking down the requirements
The Conduct Standard addresses the following specific matters:
- Governance arrangements: Clause 3 mandates that institutions set up oversight mechanisms to maintain high standards in developing and managing FE content.
- Designing tailored initiatives: Clauses 4 and 5 require FE programmes to be accessible and suited to their audience. Institutions must choose the best delivery methods and ensure content is “objective and impartial”, free from ties to specific products or marketing campaigns.
- Monitoring effectiveness: Clauses 6 and 7 insist that FE initiatives have measurable goals. Institutions must regularly check whether these goals are met, using evaluations to refine and improve their programmes.
- No marketing allowed: Clause 8 expressly prohibits marketing and sales of specific financial products or services as part of FE initiatives. Branding as part of an FE initiative is allowed, although branding may not be excessive. The FSCA will consider issuing guidance to elaborate on when branding would be viewed as excessive.
- Reporting to the FSCA: Clause 9 requires institutions to share details about their FE efforts with the FSCA. Although the exact reporting format is still in the works, it will likely align with other reporting obligations to the Authority.
Assessing effectiveness
The FSCA will take an active role in ensuring compliance. It will use “proactive supervisory approaches” to identify potential areas of concern early, with a focus on pre-empting negative customer outcomes where possible. If issues arise, the FSCA will work with institutions to address them and, if needed, seek redress where harm has already occurred.
To assess the Conduct Standard’s success, the FSCA will gather initial data. An Information Request will be sent to all financial institutions to collect baseline information about FE initiatives being undertaken. This data will help the FSCA to measure the effectiveness of the requirements of the Conduct Standard, providing a way to track progress and improvements.
