FCA CP26/23: Is the FCA Reining In Consumer Duty?

What Is CP26/23?

The FCA has published CP26/23: Consumer Duty, Scope and Proportionality, proposing several changes designed to clarify where the Consumer Duty applies and, importantly, where it does not.

The regulator remains committed to delivering good outcomes for retail customers. However, it has acknowledged that some firms may have interpreted the Duty more broadly than originally intended, particularly within wholesale markets and complex distribution chains.

What Changes Is the FCA Proposing?

One of the headline proposals is that the Consumer Duty would only apply where a retail customer is usually resident in the UK.

The FCA is also seeking to provide greater certainty around:

• Which activities fall within scope of the Duty
• When firms can reasonably rely on others within a distribution chain
• How responsibilities should be allocated across the customer journey
• Where accountability should sit in practice

The aim is to give firms greater clarity whilst maintaining the focus on customer outcomes.

A Reminder That Proportionate Means Proportionate

Perhaps the most interesting aspect of the consultation is the FCA’s message around proportionality.

The regulator notes that it has seen examples of Consumer Duty governance, monitoring and board reporting becoming increasingly detailed, sometimes beyond what is genuinely necessary.

Firms are reminded that the objective is to deliver good customer outcomes, not simply produce larger board packs, spreadsheets and governance reports.

What Does This Mean for Firms?

For most adviser firms, the proposals are unlikely to significantly reduce Consumer Duty obligations.

Firms will still be expected to:

• Deliver good customer outcomes
• Assess fair value
• Monitor customer understanding
• Maintain effective governance arrangements
• Evidence appropriate oversight

What may change is the approach. The FCA appears to be reinforcing that compliance should be practical, targeted and risk-based rather than becoming an exercise in excessive documentation.

Final Thoughts

CP26/23 does not represent a change in direction for Consumer Duty. Instead, it provides useful clarification around scope and serves as a reminder that outcomes remain more important than process.

For many firms, the consultation may be an opportunity to step back and consider whether their Consumer Duty frameworks are genuinely helping improve customer outcomes or simply creating additional administration.

The consultation is open until 18 September 2026.

Consumer Duty doesn’t have to mean bigger board packs and more paperwork.