CP26/23: FCA consults on Consumer Duty scope changes and distribution chain clarifications
The FCA wants to remove non-UK customer business from the Consumer Duty and clarify how firms in distribution chains can rely on each other. Responses close 18 September 2026.
Action required. If your firm is retail-facing, operates in a distribution chain, or serves customers outside the UK, read this now.
The FCA published CP26/23 on 29 June 2026, consulting on targeted changes to the Consumer Duty's scope and proportionality. The consultation closes on 18 September 2026, with new rules expected in Q1 2027.
The FCA has seen evidence that in some areas the Duty is being applied more widely and more intensively than intended, particularly in wholesale markets and complex distribution chains.
There are four headline proposals:
- Remove business conducted with non-UK customers from the Duty's scope entirely.
- Clarify when and how firms can rely on each other when working together in distribution chains, and how they can apply the Duty more proportionately.
- Explain the interaction between the Duty and other product governance rules.
- Promote a more proportionate approach based on a firm's role in the distribution chain, with the aim of reducing unnecessary cost and complexity while preserving retail customer protections.
The FCA identifies four firm types as particularly relevant:
- Firms with a role early in the distribution chain, including those in the wholesale sector.
- Firms that manufacture retail products or services with other firms.
- Firms in complex distribution chains.
- Firms conducting retail business for customers outside the UK.
The proposals deliver on a commitment the FCA made in September 2025, and the FCA frames them as supporting the Government's economic growth and competitiveness objectives.
What compliance leads should do now. Assess whether your current scoping and distribution chain arrangements would be affected by any of the four proposals. If your firm serves non-UK retail customers, or sits anywhere in a multi-firm distribution chain, the proposals are directly relevant. Note that the full draft Handbook text was not available at publication. The precise mechanics of the proposed reliance arrangements, and how non-UK customers would be defined, should be confirmed from the CP directly before the 18 September 2026 deadline.
