The Financial Conduct Authority (FCA) has proposed a relaxation of the recent “Consumer Duty” requirements, suggesting exemptions for professional clients and complete exclusion of non-UK customers from the framework. In a letter to Chancellor Rachel Reeves, the FCA raised concerns that the existing regulatory burden could prompt payment and securities businesses to relocate away from the UK. The proposals, announced on 1 October 2025, also include a clearer distinction between wholesale and retail markets, which may significantly reduce costs for payment firms while maintaining consumer protection standards and supporting long-term innovation (Source: FT).
The main objectives of the FCA’s proposal are:
- Exemptions for Professional Clients: To streamline compliance for institutions serving wholesale markets.
- Exclusion of Non-UK Customers: Ensuring the Consumer Duty applies solely to UK-based retail clients.
- Clearer Regulatory Boundaries: Defining responsibilities between wholesale and retail financial services.
According to the FCA, these changes could lower operational expenses for payment providers without undermining customer safeguards. The regulator emphasised that the move aims to “promote continued innovation and competitiveness in the UK’s financial sector.” The measures are currently under review, with industry feedback expected before potential implementation.
| Key Proposal | Potential Outcome | Impact on Firms |
|---|---|---|
| Professional client exemption | Reduced compliance obligations for B2B services | Operational simplification |
| Non-UK customer exclusion | Consumer Duty covers UK retail only | Lower cross-border regulatory risk |
| Distinction between market types | Clearer rules for wholesale vs retail | Cost savings, targeted protections |
Industry stakeholders can find further details on the FCA’s approach to consumer protection and payment regulation in the following resources:
