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The FCA is moving to clean up its Consumer Duty rules. The regulator put out a consultation on changes aimed squarely at wholesale markets, where the current framework has created confusion and extra costs since it launched.
Three changes are on the table. The FCA wants to draw clearer lines around what the duty actually covers, with case studies spelling out activities that fall outside its scope — market making and custody are both named as examples. Second, it wants to let firms working together lean on each other to meet obligations, so they’re not duplicating effort across the chain, as long as everyone involved is acting in good faith. Third, the territorial reach of the duty would get narrower, cutting the burden on business activity aimed at customers outside the UK. All three are pretty specific, and that specificity matters — the FCA is basically admitting the original rollout left too much grey area.
Wholesale markets aren’t retail markets.
That’s the core logic running through the whole consultation. Wholesale participants are sophisticated counterparties. They negotiate their own terms, manage their own risks, and don’t need the same hand-holding that retail consumers do. The FCA’s own position is that where firms don’t shape consumer outcomes, the duty simply shouldn’t apply. Pushing it into wholesale territory where it doesn’t belong adds cost, adds complexity, and doesn’t actually protect anyone who needs protecting. The regulator seems to have heard that message clearly from the industry.
What the Three Changes Actually Do
The clearer-boundaries piece is probably the most practically useful of the three. Right now, firms operating in those grey areas — market making, custody, and similar activities — have had to make judgment calls about whether the duty applies to them. Getting case studies from the FCA that say “no, this isn’t in scope” gives compliance teams something concrete to work with. It’s not a dramatic regulatory overhaul. It’s closer to a clarification that probably should have come earlier.
The accountability streamlining piece is also significant. In wholesale markets, chains of firms often work together to deliver a service or product. Under the current setup, each firm in that chain can end up trying to satisfy the same obligation independently, which wastes time and money. The FCA’s proposal would let firms rely on each other — basically, if one firm in the chain has handled an obligation properly and in good faith, the next firm doesn’t need to re-do the same work. That’s a practical fix for a real operational headache.
And on territorial scope — it’s probably overdue. Applying UK consumer protection rules to activities aimed at non-UK customers has always been a stretch, and the proposal to narrow that scope makes the UK regulatory environment more competitive globally. The FCA has been pretty open about wanting the UK to stay a leading financial hub. Reducing friction for cross-border wholesale activity fits that goal.
Retail Protections Stay, But Refinements Are Coming
None of this touches the retail side of the Consumer Duty. The FCA is clear on that. The whole point of the adjustments is to let the duty do its actual job — protecting retail consumers — without dragging wholesale markets into a framework that wasn’t really designed for them.
But the retail side isn’t static either. The FCA has flagged that future consultations will sharpen client classifications, drawing clearer lines between retail and professional markets. That’s a separate track, but it’s connected. Better classification means the duty lands where it’s supposed to and doesn’t bleed into places where it creates friction without benefit.
The outcomes-based approach the FCA keeps coming back to is worth taking seriously. Rather than writing prescriptive rules that firms have to follow mechanically, the FCA wants firms to focus on what actually happens to consumers. It’s a more flexible model, and it probably makes more sense in a market that moves as fast as financial services does. The downside is that outcomes-based rules can be harder to interpret in real time — which is exactly why the case studies and clearer boundaries in the current proposal matter so much.
Industry feedback has clearly shaped this consultation. The FCA’s willingness to come back and refine the duty based on what firms are actually experiencing is a decent sign that the feedback loop is working. Not every regulator moves that way.
The consultation is ongoing. More refinements are expected, and the FCA has been clear that client classification is next on the list — distinguishing retail from professional markets more sharply than the current framework does. No firm timeline was given for when those additional changes would land.
For now, the three wholesale-focused fixes are the immediate focus. Market makers and custodians, in particular, stand to get the most direct relief from the scoping clarifications.
Frequently Asked Questions
What are the three changes the FCA is proposing to the Consumer Duty?
The FCA wants to define clearer boundaries around the duty’s scope with case studies, allow firms to rely on each other to meet obligations without duplication, and narrow the territorial scope to reduce burdens on activities aimed at non-UK customers.
Does the Consumer Duty consultation affect retail consumer protections?
No — the FCA says its commitment to retail consumer outcomes stays intact, and future consultations will further sharpen the distinction between retail and professional markets.
