Refining the Consumer Duty to give greater confidence to wholesale firms

What Changed

• - The FCA is consulting on clearer scope boundaries for the Consumer Duty to confirm that wholesale, business‑to‑business activities that do not shape retail consumer outcomes should normally be out of scope, including activities such as market makin
• The FCA will provide case studies and examples of “grey areas” to illustrate when activities are, and are not, caught by the Duty, particularly for early‑chain and wholesale‑only firms.
• The FCA is clarifying accountability in multi‑firm arrangements, confirming that each firm is responsible for its own activities, can rely on other firms to meet their obligations where appropriate, and is expected to act in good faith and intervene
• The FCA plans to reduce duplication of obligations across distribution chains, including refining how the “look‑through” concept and co‑manufacturing apply where firms do not directly interact with end retail customers.
• The FCA is narrowing the territorial scope of the Consumer Duty so that business conducted for genuinely non‑UK customers will generally be out of scope, aligning with the principle that local distribution should comply with local rules.
• For many wholesale and investment banks, the narrowing of territorial scope will remove a significant proportion of cross‑border revenues from the Consumer Duty framework.

Suggested Considerations

• Map all business lines and activities to identify which are genuinely wholesale, early‑chain or business‑to‑business, and assess where the firm does or does not “shape consumer outcomes” at the end of the chain.
• Review existing Consumer Duty scoping decisions for activities such as market making, custody, safeguarding and other wholesale services, and prepare to adjust those decisions in line with FCA case studies and clarified boundaries.
• Re‑evaluate cross‑border business conducted for non‑UK clients to determine which products and services may fall outside the Consumer Duty under the proposed narrowed territorial scope, and document the basis for this classification.
• Analyse multi‑party distribution chains and co‑manufacturing arrangements to clearly delineate responsibilities, reliance points and escalation mechanisms where other firms are expected to meet their Consumer Duty obligations.
• Update product governance and Consumer Duty frameworks to distinguish between “manufacturers” and supporting firms, ensuring manufacturers continue to meet full Duty requirements while supporting firms apply Principle 12 and cross‑cutting rules proportionately.
• Review and, where appropriate, streamline monitoring, outcomes testing and board reporting for wholesale‑only and early‑chain activities, focusing intensive oversight where there is foreseeable retail harm and using risk‑based sampling elsewhere.

Key Dates

Who is Affected