The FCA has shared plans to streamline its Consumer Duty rules following stakeholder input.

It claims that streamlining the rules will give more flexibility, predictability and improved efficiency for firms.

Areas it has committed to review include reducing the potential for excessive compliance costs where firms work together to manufacture products for retail customers, updating the client categorisation framework to recognise there is a subset of investors that have the knowledge to be treated as professional clients, and looking to potentially remove non-UK consumers from the scope of the Duty.

The regulator will begin to consult on potential changes to the rules in the first half of 2026.

The also FCA said it has heard some firms are struggling to balance how to meet their vulnerability, data sharing and data protection expectations under Consumer Duty. The regulator said it will provide further clarity in this area in Q1 2026.

It will also review the application of Consumer Duty to non-UK customers with a consultation paper in the second quarter of next year.

In a separate letter addressed to Chancellor Rachel Reeves, Nikhil Rathi, chief executive of the FCA, asked the Government to consider its degree of tolerance for consumer harm as part of the review.

He said: “We are rebalancing risk as part of our strategy and will proactively do so in taking forward this work too. We do think a shared risk appetite, across government, parliament and ourselves could help. We are keen to progress how metrics could be developed articulating the government’s degree of tolerance for consumer harm and potential incidents of significant consumer detriment. This would assist in providing enduring foundations for this rebalancing of risk in the system to align with the UK’s growth imperative. We hope such an articulation of risk metrics could, following scrutiny and debate, also command a degree of consensus in Parliament.

“It would also help us maximise the benefits of the Duty and the unique flexibility it provides. We want firms to support good outcomes for retail customers, while being able to take calculated risks with confidence, innovate in ways that drive growth, help consumers pursue their financial objectives, and support the long-term development of our markets and the wider economy.”

As part of its review of Consumer Duty, the FCA said it intends to carry out a ‘handful’ of multi-firm projects to look at how the Duty is being embedded. It said it may ask for additional data as part of this exercise.

The review of embedding Consumer Duty will include 'four cross-cutting projects':

• Review of products and services outcome – How firms are designing products and services to meet customer needs, including those with characteristics of vulnerability.
• Review of firms’ approaches to outcomes monitoring – How firms are responding to our outcomes monitoring requirements.
• Review of firms’ customer journey design – Looking at the design and delivery of firms’ customer journeys to ensure customers’ needs are met, with a particular focus on how firms apply friction throughout the journey.
• Review of the consumer understanding outcome – How firms’ communications are helping consumers make informed decisions.

The regulator said it will also continue to look for more opportunities to streamline its requirements of firms, including simplification of its Handbook.

It plans to run a series of sector-level roundtables throughout 2026 to look for more areas where it can simplify or clarify its rules.