FCA Consumer Duty: Focus on consumer protection, regulatory clarity, and market growth.
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FCA Consumer Duty: Focus on consumer protection, regulatory clarity, and market growth.
1. Non-Financial Misconduct: Culture as a ControlOn 12 December 2025, the FCA published PS 25/23, confirming final guidance on non-financial misconduct (NFM). The rules, which come into force on 1 September 2026, clarify that serious bullying, harassment, and violence are breaches of the Conduct Rules (COCON).
- Key Shift: The FCA has provided a "materiality" threshold for private conduct, focusing on whether an individual's private actions demonstrate a "willingness to disregard ethical or legal obligations."
- Next Steps: Review disciplinary policies to ensure definitions of harassment and bullying align with the new COCON 1.1.7FR rule. Managers should be trained on the new decision flowcharts provided in the guidance.
- Key Shift: A focused Market Study on later-life lending will begin in Q1 2026 to ensure lifetime mortgages are meeting consumer needs.
- Next Steps: Lenders should participate in the upcoming consultations and review their "Later Life" advice journeys to ensure they meet the modern accessibility standards.
- Key Shift: The FCA is moving away from prescriptive rules and toward using its "supervisory toolkit," such as Section 166 (Skilled Persons) reviews and attestations from Senior Managers.
- Next Steps: Firms should benchmark their Fair Value Assessments against the "Good and Poor Practice" examples published by the FCA throughout 2025.
- Key Shift: The introduction of the Market Abuse Regime for Cryptoassets (MARC) and new prudential capital requirements for crypto firms.
- Next Steps: Crypto-asset firms must review their capital mapping against the CP25/42 proposals and submit consultation feedback by 12 February 2026.
- Key Shift: The 12-month mandatory product review is gone, replaced by a risk-based frequency. Additionally, co-manufacturers can now appoint a "Lead Firm" to handle fair value assessments.
- Next Steps: Review co-manufacturer contracts to identify if a "Lead Firm" arrangement could reduce your operational overhead. Update your product governance framework to reflect risk-based review cycles.
- Key Shift: Proposals include margin-based approaches or weighted liquid exposure methods to replace rigid capital floors.
- Next Steps: Non-bank trading firms should evaluate how these "bespoke" rules could unlock capital and respond to the call for feedback by 10 February 2026.
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This week, the FCA has made significant strides in enhancing consumer protection, improving regulatory clarity, and fostering market growth. The final guidance on tackling non-financial misconduct reaffirms the FCA’s commitment to strengthening ethical standards in the financial services sector. Alongside this, the FCA has outlined plans to build the future mortgage market, with a strong emphasis on accessibility and sustainability. Key updates also include crypto regulation proposals, insurance work expansions, and a reform to the UK Benchmarks Regulation. Firms should review their compliance frameworks, risk strategies, and actively participate in consultations to align with these regulatory changes.
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