FCA to Review the Consumer Duty: What It Could Mean for Asset Managers

Author:

Lewis Davison
Vice President of Product at Confluence

In her Mansion House speech on 15 July 2025, Chancellor Rachel Reeves announced that the Financial Conduct Authority (FCA) will carry out a targeted review of the Consumer Duty, introduced in 2023. The review will focus specifically on its impact on wholesale firms and the application of obligations to professional client relationships.

This initiative is part of a wider push from the new government to assess existing regulation through the lens of economic growth, efficiency, and proportionality.

The FCA is expected to deliver its findings and potential recommendations by the end of September.

Understanding the Consumer Duty

The Consumer Duty came into effect in July 2023 and introduced a set of higher expectations for firms serving retail customers. Its aim was to encourage firms to consider whether their products and services support good customer outcomes across four areas:

• Products and services
• Price and value
• Consumer understanding
• Consumer support

Firms are also required to act in good faith, avoid causing foreseeable harm, and support customers in achieving their financial objectives—principles that reflect a shift from rule-based compliance to outcomes-focused supervision.

Impact on Asset Managers

Although the Duty was designed with retail consumer protection in mind, many asset managers— including those with indirect exposure to retail investors —have taken steps to assess how the regulation could apply to them. This has included reviewing product governance processes, reviewing distribution arrangements, and documenting oversight of delegated responsibilities.

For firms dealing primarily with institutional or professional clients, the application of the Duty has been less clear. Some have expressed concern about the potential for regulatory overlap, interpretation risk, or the extension of retail protections into professional markets where existing safeguards already apply.

Challenges in Implementation

Feedback from industry participants has indicated that implementing the Duty has introduced operational challenges and resource pressures for many firms. Areas such as client classification, distribution oversight, and data sharing between manufacturers and distributors have required detailed interpretation and cross-functional alignment.

For firms with limited direct contact with end investors, establishing evidence of customer outcomes has proven especially complex.

What the Review Will Explore

The FCA’s review is expected to explore:

• Whether the application of the Duty to wholesale markets and professional clients is proportionate
• If further clarification is needed around client classification
• How the Duty interacts with existing conduct requirements under MiFID and other frameworks

The review may also examine unintended consequences of the Duty’s current scope, including the operational impact on firms that do not have a retail-facing business model.

No changes to the Duty have been proposed at this stage, and the existing requirements remain in place.

Preparing for What’s Next

Firms may wish to continue applying the Duty as currently drafted, pending any formal updates from the FCA.However, there may be value in documenting areas of ambiguity, tracking resource allocation, and monitoring how implementation has affected business processes.

Firms that have already established a scalable governance and oversight model may be better positioned to adapt to any future guidance.

What Firms Should Do Now

While the FCA review may be welcomed by many firms, it does not currently signal a rollback of existing requirements. The current rules remain in force, and any changes will take time to materialize.

In the meantime, firms should:

• Review current client classifications and determine where clarification is most needed
• Document any unintended consequences or compliance inefficiencies driven by the Duty
• Stay close to FCA updates and industry consultations ahead of September
• Consider how to balance regulatory expectations with commercial strategy if the scope is revised

Looking Ahead: The Role of Regulatory Review

The Consumer Duty introduced a significant shift in the UK’s regulatory approach—one that placed greater emphasis on customer outcomes, accountability, and a more proactive culture of compliance. For many firms, particularly those without a direct retail client base, implementing the Duty has involved significant operational effort.

The Chancellor’s recent request for the FCA to review the Duty’s impact on wholesale firms and professional client relationships presents an important opportunity: to maintain the core principles of the Duty while recalibrating its scope and proportionality. Whether the FCA uses this review to provide greater clarity around classifications and responsibilities will have a meaningful impact on how firms prepare for the next phase of compliance.

Our Ongoing Client Support

At Confluence, we’re committed to supporting firms as they navigate this evolving landscape. That includes working directly with clients to understand how regulation influences their operating models and data requirements and applying those insights to the development of solutions that respond to real market needs.

In particular:

• Our regulatory product team is actively working on disclosure design(s) to prepare for the UK’s proposed Consumer Composite Investments (CCI) framework, as a replacement for PRIIPs and UCITS disclosures. This design work will underpin clients’ requirements to produce a ‘Product Summary’ disclosure and related to this will be a focus on how such disclosures can shift to a more digital-first approach.
• The team is also enhancing our Documents & Templates Production solution to incorporate features that support accessibility, aligning with emerging expectations from regulators and end investors alike.

Across all our capabilities, we continue to focus on improvements that support more efficient, transparent, and investor-friendly reporting. We aim to support firms with practical solutions that help them navigate regulatory changes with greater clarity and confidence.

Disclaimer

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