Since its introduction in 2023, the Consumer Duty has set a new benchmark for how firms think about delivering positive outcomes for retail customers. But as implementation has progressed, wholesale firms have raised consistent concerns about scope, proportionality, and the risk of “retail creep” into markets where they have little or no direct contact with consumers.

On 29 September 2025, FCA Chief Executive Nikhil Rathi wrote to the Chancellor, setting out a Mansion House commitment on the Duty’s application to wholesale firms. Just a day later, the FCA published a wider Consumer Duty Review, confirming a forward programme of activity into 2026. Together, these developments mark an important milestone: a shift towards streamlining, clarity, and proportionality in regulation.

At Compliance Angle, we help firms navigate these changes with confidence. Below, we combine the FCA’s commitments with our own insights to highlight what firms need to know, and how to prepare.

Strategy: A Forward Plan, Not Immediate Change

The FCA was explicit that its latest announcements represent a programme of work, not wholesale policy changes at this stage. This means:

  • Flexibility: encouraging innovation and proportionate compliance.
  • Predictability: setting out consultation timelines into 2026.
  • Efficiency: reducing unnecessary costs and duplication.

Our take: Firms should not treat this as a relaxation of the Duty. Instead, this is an opportunity to engage with consultations, adapt compliance approaches, and prepare for targeted reforms. Early alignment will put firms ahead when formal policy statements land in 2026.

The FCA’s Four-Point Action Plan for Wholesale Firms

The Mansion House letter set out four key commitments to address wholesale firms’ concerns:

  1. Clarity on joint product manufacture – reducing duplication and uncertainty when firms collaborate to design retail products.
  2. Updating client categorisation – consulting on clearer, modernised standards to identify professional clients, potentially with a new high-asset test.
  3. Distribution chains – consulting in H1 2026 on rules to clarify where the Duty applies, and when it doesn’t, with scope for further exclusions of B2B activity.
  4. Excluding non-UK customers – proposals to remove business with non-UK clients from Duty scope, easing cross-border conflicts.

Key Timelines and Milestones

The FCA’s Consumer Duty Review sets out an ambitious roadmap through 2026. Highlights include:

  • Q4 2025 – Consultations on client categorisation, mortgage and insurance rules, plus targeted Handbook clarifications.
  • Q1 2026 – Joint FCA/FOS policy statement on modernising redress; pilot guides for smaller firms.
  • Q2 2026 – Consultations on non-UK customers and Duty rules in distribution chains; implementation of Advice Guidance Boundary Review; new SM&CR framework.
  • Q4 2026 – Final policy statements on Duty reforms and review of retail banking disclosures.

Our take: These milestones provide firms with predictability. By mapping business models against the FCA’s timetable, firms can plan resource allocation, governance reviews, and stakeholder engagement in advance.

Our Perspective: What This Means in Practice

At Compliance Angle, we see this as the FCA rebalancing risk without diluting consumer protection. For firms, this means:

  • Wholesale firms – greater clarity and reduced unnecessary compliance where activities are not intended for retail markets.
  • Product manufacturers – continued accountability for retail outcomes, with the FCA reinforcing that poor product governance at the top of the chain will not be excused.
  • International firms – reduced conflict between UK and overseas regimes, easing compliance costs.
  • Retail-focused firms – reassurance that the Duty remains central, but with improvements in clarity and efficiency that should simplify implementation.

Common Pitfalls to Avoid

Even with these reforms, firms should avoid:

  • Over-engineering compliance in areas clearly outside Duty scope.
  • Failing to document accountability in product governance and distribution chains.
  • Ignoring consultation opportunities and then scrambling to adapt once policy statements are finalised.

Final Thoughts

The FCA’s Mansion House commitment and September 2025 Consumer Duty Review represent a strategic recalibration. The regulator is listening to wholesale firms’ concerns, while reaffirming its intent to maintain strong consumer outcomes and support the UK’s growth agenda.

For firms, the key is to act now: engage with consultations, streamline compliance where possible, and ensure accountability remains clear. This is not about stepping back from the Duty, it’s about applying it proportionately and with confidence.

At Compliance Angle, we support firms across retail and wholesale markets in preparing for these changes. From client categorisation reviews to distribution chain mapping, we combine regulatory expertise with practical insight into what works.

Contact us today for a free consultation.📞 +44 7427792594📧 info@complianceangle.co.uk

This article originally featured on Compliance Angle | Source