FCA proposes changes to Consumer Duty scope and proportionality
The FCA issued Consultation Paper CP26/23 on Consumer Duty scope and proportionality changes.
Why it matters: Financial legal and compliance teams must prepare for potential rule changes that affect firm obligations and enforcement risks under the Consumer Duty.
- FCA published CP26/23 on June 29, 2026, seeking feedback on changes to Consumer Duty scope and proportionality.
- Consultation runs until September 18, 2026, with a policy statement expected in Q1 2027.
- Proposed changes include removing non-UK customers from scope and clarifying where the Duty applies.
- FCA aims to keep Consumer Duty focused on retail consumer outcomes, easing burdens on wholesale markets.
On June 29, 2026, the UK Financial Conduct Authority (FCA) launched Consultation Paper CP26/23 to refine the scope and proportionality of its Consumer Duty regulation.
The Consumer Duty, which took effect in 2023, sets high standards to ensure firms deliver good outcomes for retail financial customers. Since implementation, the FCA observed that the Duty's reach in wholesale markets and complex distribution chains had expanded beyond its original intent.
The consultation proposes several key changes, including removing business related to non-UK customers from the Duty's scope, clarifying its application boundaries, and explaining how it interacts with other product governance rules. These measures aim to reduce regulatory burdens on wholesale firms while maintaining protections for retail consumers.
Simon Walls, Executive Director of Markets at the FCA, emphasized the need to "refine its scope to provide greater clarity to wholesale markets, and keep the focus on the consumer outcomes it was created to improve."
The consultation is open until September 18, 2026, with the FCA planning to review responses and publish a policy statement in the first quarter of 2027. Legal and compliance professionals in UK financial services should monitor the consultation and prepare to adjust their Consumer Duty frameworks accordingly.
By the numbers:
- June 29, 2026 — FCA published Consultation Paper CP26/23
- September 18, 2026 — Consultation period closes
- Q1 2027 — FCA expected to issue policy statement and new rules
What's next: The FCA will analyze consultation feedback and aims to issue final rules and policy guidance by Q1 2027, potentially impacting firm compliance practices.