FCA Consumer Duty updates gave wholesale financial firms more room on Monday, as the UK regulator narrowed parts of the rule for B2B providers.
The Financial Conduct Authority said the changes limit the rule’s reach for some non-UK business. As a result, firms with clients that have no clear link to the British market may avoid UK compliance duties. The move also aims to cut the cost and complexity tied to overlapping rules in different places.
Since mid-2024, the Duty has required close checks on retail financial products. Forex and CFD brokers have felt that pressure in particular. According to Reuters, firms faced a one-time implementation cost of GBP 2.4 billion, or $3.1 billion.
FCA Consumer Duty Scope Clarified
The new guidance sets clearer limits on what sits outside the FCA Consumer Duty. It also explains what counts as a professional client. In addition, it simplifies how firms work together on product manufacturing.
The FCA said weak clarity had pushed firms into a heavy administrative approach. Because of warnings from legal and compliance advisers, many firms took defensive steps. However, those steps raised costs without improving outcomes for consumers.
The updated approach also tackles repeated work across firms. Previously, several firms carried out the same checks on the same products. The source said that process was inefficient and did not add extra protection for the end user.
CFD Brokers Remain Under Pressure
The core principles of the Duty remain in place, even as the FCA reduced its scope for parts of the wholesale market. However, CFD brokers still fall fully within the rule.
The regulator has continued to warn firms in this area. Notably, in February, it criticized firms for collecting too little detail on whether clients understood complex investments. The FCA said many brokers did not properly test whether CFDs suited their target market. Instead, many relied on scoring systems that gave too much weight to shallow knowledge.
While the latest changes ease the burden for some B2B providers, they do not relax the FCA’s stance on retail CFD oversight.
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