A Possible Farewell to the Consumer Duty, and Business Opportunities in Compliance

A Recent Development

It is no secret that the UK FCA has been put under considerable pressure in the past year to ease up regulation in order to “support growth”.

This has led the FCA to perform a series of regulatory changes, the latest of those initiatives announced on the 29th of September 2025, in a letter by the UK FCA’s Chief Executive (the “CE”)to the Chancellor of the Exchequer, in which they lay down a four-point action plan.

A close look at this four-point action plan reveals a possible overhaul of the relatively newly-instated Consumer Duty, to the extent of possibly effectively retiring it.

In effect, the four-point action plan intends to:

1. Narrow the scope of the institutions subject to the Duty. The first measure in the action plan is to “Provide more clarity” on the application of the Duty when firms work together to manufacture products for retail customers. Meaning, to narrow the scope of supervised entities.
2. Narrow the scope of the consumers covered by the Duty.

The CE’s letter reveals the FCA is considering to:

1. Lower the thresholds of the Qualitative and Quantitative tests, so more clients will be considered professionals: “There is a subset of investors who have the knowledge, experience, sophistication or resources that mean they do not need retail protections”.

This, as part of the FCA’s plan to “Consult on plans to update the client categorisation framework” (which it will do in Q4 2025).

1. Set another independent test, based solely on total assets, thus further increasing the scope of clients qualifying as professional clients (“We are considering complementing this with a new test at a high threshold of assets, to draw a brighter line for firms. This would give firms more confidence to identify these clients and, with their consent, take them out of the scope of the Duty and other retail protections”).

The letter states clearly that “This will expand the opportunities available to support the real economy, while reducing costs for firms”. Meaning, more and more clients will fall out of the scope of the Duty.

1. Exclude non-UK customers from the scope of the Duty. The fourth action point is to “Propose to remove business with non-UK customers from the scope of the Duty. We know firms can struggle where they have to reconcile obligations from different jurisdictions. We have heard this creates complexity and cost, and that this can have a substantial impact on firms with an export focus. We want to ensure they can feel confident locating their business in the UK. We will however carefully consider the potential impact on consumers, including UK expatriates, before making these proposals”.
2. Widen the scope of the exemptions, possibly to the point of “emptying” the Duty.

The letter states the FCA intends also to “Consult on changes to rules on the application and requirements of the Duty“, including assessing “how our existing exemptions are working and consider whether they go far enough”.

And here is where it gets real interesting – the FCA will consider limiting the application of the Duty in certain B2B situations, and also “where firms are subject to other regulatory obligations.”

Is this another way of saying, that if one fulfils all their regulatory obligations such as Client Categorisation, Suitability and/or Appropriateness assessment etc., one is exempt from being subjected to a Consumer Duty inspection?

In other words, is this a “U turn” back from outcome-focused regulation to the normal “checklist compliance”, for the sake of more clarity (which is the one area in which “checklist compliance” is superior to outcome-focused regulation)?

According to the FCA’s workplan, the FCA intends to implement these changes in the coming year. We will follow closely to see whether or not this is indeed a de-facto farewell to the Consumer Duty and a return to the usual “checklist compliance”.

The Arising Business Opportunity

The regulatory situation is currently unclear. However, what is clear, is the opportunity these changes will bring. Basically, the FCA says – if you correctly categorise your clients from the start of the relationship, you will be able to both:

1. Save time and money on needless compliance activities.
2. Legally offer your clients more products and possibilities.

In order to seize this business opportunity, one needs to:

1. Have quick, in-journey Client Categorisation processes, allowing you to immediately categorise the client and save unnecessary compliance steps.
2. Keep a detailed audit trail of the process, to be able to prove later on that there was no need in applying the extra compliance measures.

Muinmos can help you seize this business opportunity. Muinmos’ AI-powered Regulatory Classification Engine is the only solution in the market that performs fully automated Client Categorisation, according to the prevalent legal framework (in both the institution’s and the end-client’s jurisdictions); as well as, of course, keeps a full audit trail.

This will allow you to be both compliant and business-oriented, at the same time.