Explores what FCA CP26/23 means for advice firms, from Consumer Duty proportionality to technology procurement and governance.
Consumer Duty has fundamentally changed how financial services firms think about customer outcomes. Since its introduction, firms have invested significant time and resources into strengthening governance, reviewing processes, and evidencing compliance.
As firms have embedded the Duty into day-to-day operations, many have taken an understandably cautious approach. In some cases, this has resulted in duplicated processes, overlapping oversight, and uncertainty about where responsibilities begin and end, particularly where multiple organisations are involved in delivering products and services.
In response, CP26/23 seeks to address that uncertainty. Rather than introducing new Consumer Duty requirements, the consultation proposes greater clarity around the scope of the Duty and how firms should apply it proportionately. For advice firms, it presents an opportunity to review existing processes, remove unnecessary duplication, and ensure that governance and technology continue to support good customer outcomes.
On 29 June 2026, the Financial Conduct Authority (FCA) published its latest Consultation Paper, FCA CP26/23. The paper sets out proposed clarifications to how Consumer Duty should be applied and seeks feedback from industry stakeholders before any changes are finalised. The aim is to make the framework easier to apply in practice without reducing the level of protection provided to consumers.
Following the introduction of the Duty, many firms took a broad approach to applying its requirements. In some cases, this resulted in firms carrying out overlapping reviews, requesting duplicate evidence from third parties, or applying Consumer Duty to activities where the FCA never intended it to apply.
CP26/23 seeks to address this by:
Together, these proposals are intended to provide firms with greater clarity on where Consumer Duty applies and how it should be implemented in practice. They also include targeted changes to the scope of the Duty, such as proposals relating to certain business with non-UK retail customers. Overall, the FCA's objective is to help firms focus their efforts where they can have the greatest impact on delivering good customer outcomes.
Proportionality has always been a core principle of Consumer Duty, but CP26/23 seeks to clarify how it should be applied in practice.
The key message is that proportionality does not mean lower standards. Every regulated firm remains responsible for delivering good customer outcomes within the scope of its activities. However, the extent of those responsibilities should reflect the firm's role, the decisions it makes, and the influence it has over customer outcomes.
Consider a typical advice journey. An investment provider designs a product, an investment platform makes it available, and a financial adviser recommends it to a client. Each organisation contributes to the customer's experience, but each has different responsibilities.
The investment provider is responsible for designing a product that offers fair value. The adviser is responsible for ensuring the recommendation is suitable for the client's objectives and circumstances, while the platform is responsible for delivering its own service effectively.
CP26/23 reinforces that each firm should focus on the responsibilities it controls, rather than duplicating monitoring or governance activities already carried out elsewhere in the distribution chain. This helps reduce unnecessary duplication while maintaining the high standards of consumer protection expected under Consumer Duty.
For many smaller advice businesses, Consumer Duty has required significant investment in governance, reporting, and evidence gathering.
While robust oversight remains essential, CP26/23 acknowledges that smaller firms should not necessarily be expected to perform the same level of activity as organisations designing financial products or operating large distribution networks.
In practice, this means smaller and mid-sized firms should focus on:
By focusing on their own responsibilities, firms candemonstrate how their advice process supports clients throughout therelationship without duplicating assessments already completed by productproviders or platforms. This enables firms to balance regulatory expectationswith operational efficiency while dedicating more time to delivering advice andstrengthening client relationships.
CP26/23 should not be viewed as an opportunity to reduce compliance standards. Instead, it provides firms with an opportunity to review whether their existing governance and compliance processes remain proportionate to the role they perform.
Questions firms may wish to consider include:
While these proposals may change how firms approach compliance, they do not change the overall objective of Consumer Duty. Firms must still understand their clients, monitor outcomes, support vulnerable customers, and act in their best interests. CP26/23 recognises that firms performing different roles within the distribution chain do not all need to evidence those outcomes in the same way.
As firms review their Consumer Duty framework, they should also consider whether their existing technology is helping them meet those expectations. CP26/23 encourages firms to think beyond compliance processes alone and consider how technology supports the delivery of good customer outcomes.
For advice firms, this represents a shift in how client portals and other technology are evaluated. Rather than focusing solely on individual features or operational efficiency, firms should assess whether their systems help advisers maintain an up-to-date understanding of clients, identify meaningful changes in circumstances, support ongoing engagement, and evidence proactive service over time.
Historically, client portals have been viewed primarily as tools for document storage, secure messaging, or workflow automation. While these capabilities remain important, they are no longer the only considerations. Increasingly, firms should be asking whether their technology helps them build stronger client relationships and support their Consumer Duty responsibilities.
A well-designed client portal can help advisers maintain accurate client information between reviews, identify changing needs sooner, and create an audit trail that demonstrates ongoing engagement. This not only supports compliance but also enables advisers to deliver more timely, relevant advice as clients' circumstances evolve.
Technology procurement is no longer just about functionality or operational efficiency. Firms should also consider how a platform supports ongoing client engagement, strengthens governance, and helps evidence the delivery of good customer outcomes. Asking the right questions during the procurement process can help ensure technology continues to support both regulatory expectations and long-term client relationships.
When evaluating new or existing client technology, firms may wish to ask:
Although FCA CP26/23 remains a consultation, it provides a clear indication of the FCA's direction of travel. The focus is not on reducing regulatory expectations, but on helping firms apply Consumer Duty more consistently, proportionately, and efficiently.
For advice firms, this presents an opportunity to review existing processes, clarify responsibilities across the distribution chain, and ensure technology continues to support the delivery and evidence of good customer outcomes. There is no need to wait for the final policy statement to begin assessing whether existing governance and compliance processes remain proportionate.
As firms continue to review their Consumer Duty approach, technology that supports ongoing client understanding and engagement will become increasingly valuable. Lyfeguard helps advisers build a more complete, up-to-date view of every client and their family. By surfacing important life changes, supporting ongoing engagement, and maintaining accurate client information, firms can strengthen client relationships while building the evidence needed to demonstrate good customer outcomes.
