Trailed earlier this year following the FCA’s FS25/2 and the Chancellor’s Leeds Reforms, the FCA published three papers on 30 September 2025 outlining the next steps in its supervision of the Consumer Duty (‘the Duty’). These set out the regulator’s focus areas for 2025/26, including plans to clarify expectations for wholesale firms.
The FCA’s three September publications are:
- Our Consumer Duty Focus Areas
- Consumer Duty Requirements Review: Update
- Mansion House Commitment on the Consumer Duty’s Application to Wholesale Firms.
The FCA’s letter to the Chancellor fulfils a Leeds Reforms commitment to clarify how the Consumer Duty applies to wholesale firms. It stands out among the September publications – not just for its content, but for the signals it sends to the industry.
Consumer Duty focus areas
The FCA’s September publications reaffirm that the Duty remains central to its regulatory strategy. It will be used to support trust, rebalance risk, and promote growth. The regulator is moving away from introducing new rules, unless strictly necessary, instead relying on the Duty’s broad framework to act as a safety net, enabling it to intervene where needed.
Three contextual points stand out:
- The Duty is positioned as a flexible tool to enable the streamlining of regulation
- The FCA will continue using data collection and thematic reviews to supervise firms
- There's a clear intention to identify outliers through surveys and information requests
In 2025/26, four cross-cutting projects will shape the FCA’s supervisory activity, as outlined below.
Review of the products and services outcome
The focus will be on product design and alignment with customer needs, particularly for vulnerable groups. The FCA will assess how firms define and deliver 'good outcomes' and mitigate foreseeable harm. Products that consistently fail to deliver value – due to design, purpose, features, or distribution – may face scrutiny.
Review of firms’ approaches to outcomes monitoring
The FCA remains concerned about firms’ ability to measure outcomes and take meaningful action. Firms must demonstrate how they proactively achieve good outcomes, not just avoid poor ones. Senior management will be expected to lead this shift in mindset.
Review of firms’ customer journey design
Customer experience should reflect product purpose and target market. The FCA will examine how firms anticipate customer needs, deliver understandable information and provide effective support. Particular attention will be paid to the existence of friction – whether this protects consumers, or acts as an unnecessary barrier and should be removed.
Review of the consumer understanding outcome
The FCA will increase its focus on customer communications. Firms must identify what customers need to understand at each stage of the journey and test communications for clarity, timing, and accessibility.
Additional supervisory activity
The FCA has also signposted reviews or updates in specific markets:
- Unit-linked and long-term savings: transparency of charges and product value (findings due late 2025)
- SME business current accounts: fair value and consumer understanding
- Credit cards and peer-to-peer platforms: terms and promotional offers
- Exchange-traded products and model portfolio services: Duty compliance (findings due in 2026)
- Pure Protection and Premium Finance: ongoing market studies
Requirements review: update
The FCA has described its work to simplify regulation under the Consumer Duty as an “ambitious programme of action”. The initiatives aim to reduce complexity and regulatory burden while maintaining oversight to protect consumers.
Application of the Duty in distribution chains
By the end of 2025, the FCA will outline next steps for its proposal to designate a ‘lead’ manufacturer in co-manufacturing arrangements for insurance products. This role would carry sole responsibility for product governance. In the first half of 2026, the FCA will consult on clarifying where the Duty applies, reviewing existing exemptions, and potentially removing non-UK business from scope.
These areas – distribution chain responsibilities and cross-border application – have presented challenges for firms. Further clarity is expected to support more consistent implementation.
FCA co-ordination with the Financial Ombudsman Service
As part of the Leeds Reforms, the FCA, the Government and the Financial Ombudsman Service (FOS) are exploring closer alignment. This includes changes to the FOS’s 'fair and reasonable' test and a mechanism for consulting the FCA on rule interpretation. Firms have long raised concerns about FOS decisions creating de facto regulatory standards. The upcoming consultation in H1 2026 will be important for firms seeking greater certainty, and is an opportunity for firms to make their views known.
Consistency in rules and definitions
In Q4 2025, the FCA will consult on updates to client categorisation rules and SME definitions. A broader review of core definitions is planned for 2026. These changes aim to improve clarity, though they're unlikely to significantly reduce compliance burdens.
Simplifying disclosure rules
The FCA recognises that some legacy disclosure rules conflict with the Duty’s 'consumer understanding' outcome. Planned reforms include updates to retail disclosures (Q4 2025), APR and cost disclosures (2026), and retail banking rules. These consultations may offer firms an opportunity to advocate for more flexible, customer-focused communication standards.
Broader reviews of product governance, client assets, and training and competence rules are not proceeding for now, and the FCA notes that regulatory stability can benefit firms.
The Duty’s application to wholesale firms
The FCA has acknowledged the challenges wholesale firms face under the Duty, particularly when they manufacture products that reach retail consumers without direct interaction. These firms often operate within complex distribution chains, where responsibilities and expectations aren't always clear.
The recent letter to the Chancellor reaffirmed the FCA’s commitment to reducing the regulatory burden and introducing fewer new rules. It also highlighted the Duty’s positive impact on firm conduct and consumer confidence.
While the letter didn't provide immediate answers, it committed to offering more clarity on how the Duty applies when firms collaborate to manufacture products. This includes further guidance on responsibilities within distribution chains and the Duty’s scope for non-UK business.
The FCA also emphasised the need for a shared risk appetite across regulators and the Government. It proposed developing metrics to define acceptable levels of consumer harm, signalling that efforts to rebalance risk may come with increased exposure to poor outcomes – and that accountability should be shared.
This evolving relationship between the FCA and the Government will be important to monitor, as it may shape how the regulator approaches supervision and enforcement in the coming years.
How can firms respond?
The FCA’s latest publications signal a continuing shift toward more targeted, data-driven supervision under the Duty. Firms should prepare for increased scrutiny of product design, customer journeys, and communications, while also engaging with upcoming consultations on regulatory simplification. Clarity around wholesale responsibilities and distribution chains will be especially important. As the FCA balances its consumer protection mandate with economic growth objectives, firms must remain agile and proactive in demonstrating how they deliver good outcomes.
For more insight and guidance, get in touch with our team.
