The Financial Conduct Authority has proposed removing non-UK business from the scope of its Consumer Duty rules, in a move intended to ease compliance burdens on wholesale financial firms operating in retail markets.

The regulator published the proposals as part of a broader effort to clarify how the Consumer Duty applies across distribution chains and complex product structures. Under the plans, transactions involving genuinely non-UK customers — where there is no clear UK link or reasonable expectation of UK regulatory protection — would fall outside the Duty’s reach.

The FCA said the changes would also establish clearer boundaries around what activity is excluded from scope, reducing the need for firms to demonstrate that the Duty does not apply to particular business lines. Greater clarity on responsibilities within distribution chains and in the design of complex products would also be provided.

Simon Walls, the FCA’s executive director of markets, said the Consumer Duty had never been intended to function as a wholesale regime. “It was never intended to become a Wholesale Duty, imposing on deals between sophisticated parties,” he said. The regulator was refining the Duty’s scope to provide greater clarity to wholesale markets while keeping the focus on consumer outcomes, he added.

The proposals form part of a four-point plan the FCA outlined in a commitment made at Mansion House to address industry concerns about the Duty’s application to wholesale activity.

Separately, the FCA published a consultation on simplifying its insurance rules, while maintaining what it described as appropriate levels of consumer protection. The regulator said it would continue to engage with firms and stakeholders to support implementation of the Consumer Duty across markets.

The Consumer Duty, which came into force in 2023, requires firms to deliver good outcomes for retail customers. Critics in the wholesale sector have argued that its broad drafting created uncertainty about its application to business conducted between professional counterparties, particularly in cross-border transactions.

The FCA’s consultation on Consumer Duty scope and proportionality is open for industry responses.