The Financial Conduct Authority (FCA) published Feedback Statement (FS) 25/2 to highlight action areas and further plans for reviewing the requirements of the Consumer Duty rules.
The FCA's approach to the Duty is to allow for more effective competition and innovation. Consumers should have access to products and services suitable for their needs, and which provide fair value, appropriate communications and consumer support, while also improving trust in, and the reputation of, UK markets.
In 2025/26 four cross-cutting projects will shape the FCA's supervisory activity, as outlined below.
2025/26 Supervisory Projects
- Review of products and services outcome – How firms are designing products and services to meet customer needs, including those with characteristics of vulnerability.
- Review of firms' approaches to outcomes monitoring – How firms are responding to our outcomes monitoring requirements.
- Review of firms' customer journey design – Looking at the design and delivery of firms' customer journeys to ensure customers' needs are met, with a particular focus on how firms apply friction - whether this protects consumers, or acts as an unnecessary barrier and should be removed.
- Review of the consumer understanding outcome – How firms' communications are helping consumers make informed decisions.
CASS and Consumer Protection
The CASS rules ensure consumer protection by imposing rules that safeguard clients' money in the event of firm insolvency or misconduct. While CASS has long provided a framework for safeguarding clients' money and assets, the Consumer Duty reinforces these protections by raising the bar on firms' conduct and their duty of care toward consumers.
Interest on Client Money
The CASS rules provide latitude for regulated firms to pay all, some, or none of the interest earned on client money balances back to the relevant client (CASS 7.11.33 G). Firms must notify their clients in writing if they do not intend to pass on the interest earned on client money balances (CASS 7.11.32 R). Issues around interest are of course more prominent today because of the high interest rate environment and introduction of Consumer Duty rules.
Impact of Consumer Duty
Consumer Duty means that firms are unable to rely on clauses hidden within terms and conditions to excuse them from passing on earned interest. The Duty ensures customers receive fair value for products and services and that information is clearly disclosed by firms and understood by their clients.
Next Steps
The FCA's recent updates highlight a move toward more focused, data-driven supervision under Consumer Duty. Firms should get ready for closer examination of their product design, customer journeys, and communications, and stay involved with upcoming consultations on simplifying regulations.
How Fide Consulting Can Help
Our team can help you assess your CASS arrangements from a Consumer Duty perspective, identify areas for improvement, and implement changes to ensure you meet both sets of regulatory requirements effectively.