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FCA

FCA

Financial Conduct Authority (UK)

Medium Impact

FCA proposes refinements to Consumer Duty scope for wholesale markets

Published

Jun 29, 2026

Topics

Consumer Duty, Wholesale markets, Scope and territorial application, Retail customer outcomes, Client categorisation, Governance and controls

Executive Summary

The FCA is consulting on targeted changes to the Consumer Duty to give wholesale firms greater certainty that the Duty is not intended to apply to most business-to-business wholesale activity where retail consumer protection is not at risk. The FCA identifies three proposed refinements: clearer scope boundaries, including case studies for grey areas such as market making, custody and safeguarding; clarified accountability between firms in distribution or value chains, so firms are responsible for their own activities and may rely on others acting in good faith unless there are clear signs of harm; and narrower territorial scope, under which business conducted for genuinely non-UK customers would generally fall outside the Duty. The changes are not yet final and no implementation date is specified in the supplied FCA blog. Firms should therefore treat this as a consultation-driven regulatory development, maintain existing Consumer Duty controls, and prepare to update scope, governance, delegation, reliance and cross-border controls once final rules or guidance are published.

What Changed

modifiedWholesale-market scope boundaries

Previous

Some wholesale firms reported uncertainty and cautious interpretation of the Consumer Duty, creating cost and complexity in parts of wholesale markets where consumer protection was not at risk.

New

The FCA proposes clearer boundaries to confirm that most business-to-business wholesale activity is outside the Duty where the firm does not genuinely shape retail consumer outcomes.

modifiedAccountability across firm value chains

Previous

Firms may have duplicated oversight, assurance or contractual controls because of uncertainty about how Consumer Duty responsibilities apply across wholesale value chains.

New

The proposed approach would reduce duplication by aligning responsibility to each firm’s own activities, while retaining a duty to respond to clear signs of harm.

modifiedTerritorial scope for non-UK customer business

Previous

UK firms exporting financial services could apply Consumer Duty controls to overseas wholesale business because of uncertainty about the Duty’s territorial reach.

New

The FCA proposes that genuinely non-UK customer business should generally be out of scope, which the FCA says may remove a significant proportion of relevant revenues from scope for many investment banks.

modifiedLink to client categorisation reforms

Previous

Client categorisation proposals were pending following the FCA’s prior consultation referenced in the blog.

New

Firms should monitor the FCA’s final client categorisation output because it may interact with Consumer Duty scope determinations.

Business Impact

Who is affected

UK-authorised firms and groups with wholesale-market activity, including investment banks, wholesale brokers, asset managers, custodians, safeguarding service providers, market makers and firms involved in manufacturing or distributing products that may ultimately reach retail customers. Retail-facing firms and wholesale firms that genuinely shape retail consumer outcomes remain relevant to the Duty.

Jurisdictions

United Kingdom, Cross-border / non-UK customer business conducted by UK firms

Business processes

Consumer Duty scope assessment, Wholesale client onboarding and categorisation, Product and service governance, Value-chain due diligence and reliance controls, Cross-border customer and revenue mapping, Legal and compliance interpretation of FCA Handbook PRIN 2A Consumer Duty requirements, Board and senior management Consumer Duty governance, Contractual allocation of responsibilities between firms

Estimated effort

Medium

Compliance risk

Medium

Affected Reports

Consumer Duty applicability matrix or scoping registerWholesale activity and product governance control inventoryClient categorisation and UK/non-UK customer perimeter workflowInter-firm reliance, delegation and value-chain oversight controlConsumer Duty board or governance management information pack
FieldValidation rule
Activity typeFlag wholesale activities identified by the FCA as normally not caught when they do not genuinely shape consumer outcomes, including market making, custody and safeguarding.
Retail customer outcome influenceRecord whether the firm genuinely shapes retail consumer outcomes; where it does not, the FCA indicates the Duty should not apply.
Customer jurisdiction / UK nexusIdentify genuinely non-UK customer business for potential exclusion under the FCA’s proposed narrower territorial scope.
Client categoryMaintain distinction between retail and professional/wholesale clients and monitor the FCA’s forthcoming final client categorisation changes referenced in the blog.
Reliance on another firmDocument where the firm relies in good faith on another firm to meet its own obligations and define triggers for escalation where there are clear signs of harm.
Clear signs of harmAdd or review escalation criteria for situations where the firm must respond despite relying on another firm in the value chain.

Recommended Actions

  1. 1

    Do not decommission existing Consumer Duty controls until the FCA publishes final rules or guidance; the current source describes consultation proposals, not final binding changes.

  2. 2

    Create a gap analysis of wholesale activities currently treated as in scope solely because of uncertainty, focusing on market making, custody, safeguarding and other activities that do not shape retail consumer outcomes.

  3. 3

    Map revenue, customers and activities by UK versus genuinely non-UK customer status so the firm can assess the practical effect of the FCA’s proposed territorial narrowing.

  4. 4

    Review value-chain accountability frameworks, contracts and oversight procedures to distinguish the firm’s own Consumer Duty responsibilities from areas where it relies on another firm acting in good faith.

  5. 5

    Define management information and escalation triggers for clear signs of retail customer harm, because the FCA’s proposed reliance approach still expects firms to respond where harm indicators are evident.

  6. 6

    Update Consumer Duty governance papers to explain that the FCA is refining the Duty for wholesale markets while maintaining its focus on retail customer outcomes.

  7. 7

    Monitor the FCA’s related final output on client categorisation later in the year because the FCA says this will sharpen the distinction between retail and professional markets.

  8. 8

    Track the FCA consultation paper, response deadline, policy statement and any Handbook or non-Handbook guidance amendments before making final system, policy or contractual changes.

Timeline

publication

Jul 27, 2022

FCA published PS22/9, the final rules for the new Consumer Duty.

effective date

Jul 31, 2023

Consumer Duty implementation deadline for new and existing open products and services.

effective date

Jul 31, 2024

Consumer Duty implementation deadline for closed products and services.

publication

Invalid Date

FCA blog announced consultation proposals to refine the Consumer Duty for wholesale firms.

Sources

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