FCA addresses concerns over application of Consumer Duty to wholesale firms

The FCA has published a letter to the Chancellor on its plans to address concerns about the application of the Consumer Duty for firms who are primarily engaged in wholesale activity.

The FCA has engaged with wholesale firms on their particular concerns, and plans to amend the Duty’s rules to remove disproportionate burdens. The letter also sets out an action plan for this rest of this year and the first half of 2026:

• Providing more clarity on supervisory approach and expectations under the Duty when firms work together to manufacture products for retail customers;
• Consulting on plans to update the client categorisation framework,  to set clearer standards for firms to identify individuals with the knowledge, experience, sophistication or resource that mean they are capable of being treated as professional clients;
• Consulting on changes to rules on the application and requirements of the Duty, including through distribution chains; and
• Proposing to remove business with non-UK customers from scope of the Duty.