Research shows that formative assessment can exert a powerful effect on student learning, yet the complexity of formative assessment is not well understood and some curricular structures and practices do not fully exploit its potential. This article outlines the background to the political promotion of employability and shows that institutional responses are influenced by multiple considerations. It discusses formative assessment and models it as a complex signalling system before considering the implications, for students’ employability, of accentuating the attention given to formative assessment. The potential for action is discussed with reference to three levels: those of the institution, the department, and the individual academic.