I don’t think I was the only one a little surprised by the Chancellor’s decision this week to order a significant review of at least part of the Consumer Duty, which was only fully introduced in 2023.

While many will have read our news report on the review, what you may not have realised is that there were a huge number of papers published by the FCA this week relating to regulatory reform, the Chancellor's current favourite topic.

The plan to review part of the Consumer Duty was just one of the reforms planned to cut red tape and stimulate growth and 'unlocking' investment (if anyone knows where it's locked up, by the way, do let me know).

In the Chancellor’s speech to the Mansion House on Tuesday she confirmed a review of the impact of the Consumer Duty on ‘wholesale’ activity. Specifically this will look at how firms, such as asset managers and other B2B financial firms who do not deal directly with consumers, may have inadvertently been dragged into the orbit of the Consumer Duty and incurred additional and unnecessary admin as a result.

Many will see a change in this area as making sense. Pushing up costs for asset managers by forcing them to comply with a duty which has little or no bearing on their day to day wholesale business is a common sense step.

This will be pretty quick review with the FCA tasked with reporting back to the Treasury by early September. Expect a scaling back of some of the Consumer Duty rules, particularly as they may apply to the wholesale sector.

This may, of course, be just the first part of further scaling back the Consumer Duty. The FCA has already scrapped the requirement for regulated firms’ board to have a Consumer Duty champion (and I know at least one person who was a bit miffed at this having just been appointed as a Consumer Duty Champion!) and there have been other minor changes.

The ‘mood music’ from the Treasury, echoed by the FCA, is ‘more growth, less regulation.’

Realistically, I do not expect the complete dismantling of the Consumer Duty but further reform has to be on the cards, perhaps in the area of collecting date and other admin burdens.

One of the reasons for this is that there is evidence that the Consumer Duty has pushed up the cost of advice and actually made financial advice less affordable and less available. With only 9% of the population paying for advice there is plenty of reason to believe that reform is necessary. The Chancellor seemed particularly keen in her Mansion House speech to trumpet the FCA's targeted support plans so expect to see this rolled out quickly.

To be fair, the FCA has already indicated that Consumer Duty reform is on the way.

Last September the FCA gave a strong hint that reform of the Consumer Duty was likely. FCA chief operating officer Emily Shepperd said that the main focus was initially likely to be removing areas of “duplication” and “confusion or over-prescription” which added unnecessary costs for regulated business.

The Consumer Duty began to be introduced in 2022 (for all products from 2023), with a requirement for firms to improve communication and treat customers fairly at all stages of their journey.

Its intentions were honourable but its impact may have been a little heavy handed. Perhaps the time is right for a lighter touch?

With unemployment beginning to creep up, steps to promote growth may be far more important to Ms Reeves than well intentioned but onerous regulation whose value is difficult to quantify.

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Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience. This topical comment on the Financial Planning news appears most weeks, usually on Fridays but occasionally other days.  Email: This email address is being protected from spambots. You need JavaScript enabled to view it. Follow @FPT_Kevin 

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