FCA Proposes Narrower Consumer Duty Scope for Wholesale Business

The Financial Conduct Authority published proposals on 29 June to clarify how the Consumer Duty applies to wholesale financial businesses that are involved in retail markets.

The FCA said the changes would remove business for genuinely non-UK customers from the Duty’s scope where there is no clear UK link or reasonable expectation of UK protection. The regulator also said it wants clearer boundaries around out-of-scope activity and more clarity on firms’ responsibilities across distribution chains and complex product design.

Simon Walls, the FCA’s executive director of markets, said the Consumer Duty was not intended to become a “Wholesale Duty” for sophisticated-party transactions. The regulator linked the proposal to its broader effort to keep consumer-outcome protections while reducing unnecessary compliance burden for wholesale firms.

Why it matters

Wholesale scope questions can affect brokers, liquidity providers, product manufacturers and distributors that sit upstream of retail trading platforms. Clearer boundaries may reduce conservative over-application of Consumer Duty processes where the end customer is outside the UK or where the transaction is genuinely wholesale.

For traders, the important point is that UK retail protections remain focused on actual retail outcomes, while firms involved in distribution chains get more precise expectations about when those protections apply.

What to watch next

Watch the FCA’s wholesale Duty consultation responses, especially from brokers, market makers, investment banks and trade bodies. The practical issue is whether the final rules give enough certainty without weakening protections for UK retail clients who trade through platform or product chains.