The UK’s Financial Conduct Authority has rolled back elements of its Consumer Duty regulation affecting wholesale financial businesses, acknowledging the framework imposed excessive burdens on B2B providers since its mid-2024 launch. The regulator announced Monday it will exempt genuinely non-UK businesses with no material connection to Britain from compliance requirements, addressing costly extra-territorial overreach. Industry-wide implementation costs previously reached GBP 2.4 billion.
The FCA admitted unclear guidance forced firms into defensive compliance postures that inflated costs without improving consumer protection. The revised guidance clarifies professional client definitions and eliminates duplicative product assessments across multiple firms. However, retail-focused CFD and forex brokers remain fully subject to the Duty’s stringent requirements, with the regulator recently criticizing firms for inadequate client suitability assessments in February.
The changes primarily benefit wholesale providers operating cross-border, while consumer-facing brokers should expect continued intensive scrutiny over product appropriateness and client knowledge verification.
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** B2B firms servicing non-UK clients can now reassess compliance costs and territorial obligations, while retail brokers must maintain or strengthen suitability assessment processes immediately.
Source: Finance Magnates