FCA refines Consumer Duty

On 30 September 2025, the FCA released a series of important updates on the Consumer Duty: 

• A letter to the Chancellor of the Exchequer, Rachel Reeves MP, on the Consumer Duty’s application to wholesale firms, outlining the FCA’s four-point action plan;
• A new webpage on the FCA’s Consumer Duty focus areas, setting out the FCA's workplan for 2025/2026; and
• A new webpage on the FCA’s Consumer Duty requirements review update, setting out the action taken by the FCA since its Call for Input in July 2024 and tracking further actions and future priorities.

These developments seek to clarify certain aspects of the Duty and address industry concerns around proportionality, particularly for wholesale firms. Please see our briefing for a detailed review of the proposed changes, which we have summarised below. 

As part of the four-point action plan, the FCA will consider clearer guidance in relation to the manufacturing of products, updates to client categorisation, changes to the application of the Duty across distribution chains and the exclusion of non-UK customers. In terms of other focus areas, the FCA is prioritising initiatives where it sees the greatest potential for consumer harm and where further clarity will help firms deliver better outcomes, in particular relating to embedding the Duty and sharing good practice; vulnerability and data protection; price and value; and certain other sector-specific priorities. The regulator has also set out how it plans to further streamline its rules in a phased approach to regulatory simplification. 

The FCA’s four-point plan is a welcome step toward making the Consumer Duty more proportionate for wholesale firms, offering clearer guidance and potential relief relating to client categorisation, distribution chains and territorial scope. While the plan signals a constructive intent to reduce unnecessary burdens, its effectiveness will ultimately depend on how clearly and consistently the FCA translates these measures into actionable rules. It is important to note, however, that the proposed changes do not equate to a complete removal of the need for wholesale firms to consider retail consumer impacts – the FCA expects clear accountability where firms, including product manufacturers, play a role in significant harms caused to consumers. 

With respect to the FCA’s phased approach to regulatory simplification, much will depend on whether the incremental reforms deliver the clarity and consistency that firms and consumers alike are seeking, or whether further structural changes will ultimately prove unavoidable.

In light of these developments, firms need to be prepared to review their application of the Consumer Duty. For further details, please see our briefing FCA Refines Consumer Duty: Balancing Protection and Proportionality.