The Financial Conduct Authority has opened a consultation on a package of targeted rule and guidance clarifications intended to simplify the FCA Handbook, remove outdated or duplicative requirements and reduce administrative burden, while maintaining Consumer Duty standards of consumer protection. The proposals apply to regulated firms operating in retail markets and UK authorised fund managers, and sit within the FCA’s Consumer Duty Requirements Review workplan. Key changes under consultation include deleting parts of the UK UCITS “concentration rule” on investment in other collective investment schemes, alongside extending transitional arrangements so fund managers are not expected to take action ahead of the new deadline. For client assets, the FCA proposes amending record-keeping so due diligence records are retained for five years from creation or modification, permitting the use of Euroclear UK & International’s Investment Funds Service System Record for external custody reconciliations (with conditions and daily reconciliation as best practice where relevant), and allowing less frequent reconciliations where third-party statements cannot be obtained monthly. Additional CASS proposals address bank interest flows and retail client protections, including clarifying that retail client interest retention and the use of retail safe custody assets for securities financing transactions must be compatible with the Consumer Duty, while excluding Consumer Duty compliance from the scope of the CASS audit. Insurance and funeral plan proposals include removing product-specific rules for payment protection insurance and packaged bank accounts, deleting PROD 4.5 (with a related distributor consideration moved into ICOBS), removing the minimum 12-month funeral plan product review frequency, and deleting a pricing record retention rule linked to a decommissioned insurance pricing attestation. The FCA also seeks views on piloting a “smaller firms guide” approach (proposed initial focus on consumer finance credit brokers) and on updating or retiring residual Handbook and website references to Principles 6 and 7 and Treating Customers Fairly materials, including retiring the Responsibilities of Providers and Distributors for the Fair Treatment of Customers guide. Responses are requested by 27 January 2026. The FCA proposes that CASS rule changes take effect three months after final rules are made, while other changes would take effect immediately after the policy statement, which the FCA anticipates publishing in the second quarter of 2026; it also indicates it will seek to finalise an extension to the UCITS transitional deadline before the current expiry date.
Financial Conduct Authority 2025-12-09
Financial Conduct Authority launches consultation to streamline Handbook rules including UCITS concentration limits, CASS requirements and insurance product provisions
The Financial Conduct Authority (FCA) has launched a consultation to simplify the FCA Handbook by removing outdated requirements and reducing administrative burdens while maintaining Consumer Duty standards. Key proposals include changes to the UK UCITS concentration rule, amendments to client asset record-keeping, and updates to insurance and funeral plan regulations. The FCA also seeks feedback on a "smaller firms guide" and retiring certain Handbook references.