Consumer Duty Reform: Responsibility across distribution chains
When a customer takes out credit through a broker, several firms may shape their experience. The lender designs the agreement, the broker explains the offer, and another business may later service the account. Consumer Duty responsibilities run through that distribution chain. But how much checking should each firm do, and when is it reasonable to rely on someone else?
The FCA’s proposed changes in CP26/23 put those questions back on the agenda. For consumer credit firms, this is a useful opportunity to examine where responsibilities are clear, where work is duplicated and where customers could fall between businesses.
What does the consultation propose?
CP26/23 addresses the scope and proportionate application of the Consumer Duty through a package of measures amending the handbook and guidance to:
Remove business with non-UK customers from the Duty's scope.
Make it clearer where the Duty applies and where it doesn’t.
Clarify when and how firms can rely on each other when they work together in distribution chains, and how they can apply the Duty more proportionately.
Explain the interaction between the Duty and other product governance rules.
The consultation closed on 18 September 2026. The FCA expects to publish its policy statement and make any new rules in Q1 2027. That is an expected rule-making timetable, rather than a confirmed date on which all changes take effect.
Fair Value: A useful starting point
A lender’s fair value assessment does not remove a broker’s own distribution responsibilities. Under PRIN 2A.4, manufacturers must give distributors the information needed to understand the intended value. Distributors must ensure their arrangements remain consistent with fair value, including considering the impact of their charges.
Our recommendation is to ask a more useful question than whether a fair value document is on file: does the information enable the broker to understand the product and assess its own contribution to the customer’s total cost? Where the answer is unclear, identify the missing information and agree how it will be provided.
The same discipline applies to target markets. The FCA’s recent products and services findings emphasise appropriate distribution arrangements, meaningful information sharing and action where distribution causes harm. These are existing expectations.
A Motor Finance Example
Consider a fictional dealership acting as an authorised credit broker. Its lender provides product information and a summary of its value assessment. The dealership trains its sales team and checks a sample of customer interactions.
Complaints then suggest that some customers understood only the monthly payment and were surprised by the final payment. The lender assumes its written documents explain the position. The dealership assumes the lender’s application process checks understanding.
We would recommend examining both parts of the journey. Did sales staff explain the final payment accurately? Was it prominent at the point customers made their decision? Did the online process reinforce that explanation? Did customers needing additional help receive it?
The businesses should agree who will investigate each issue, how findings will be shared and who will make any necessary changes. They should also consider affected customers and test whether the revised journey improves understanding. A revised script alone cannot show that the problem has been resolved.
This illustrates the limits of reliance. CP26/23 envisages firms responding to information that calls another firm’s conduct into question, including working together to establish whether a problem arises from the product, its distribution or both.
What to do now
We recommend using the period before the policy statement to review one important distribution relationship. Start with these five steps:
Map the actual activities. Record which firm controls each significant stage of the journey. Include introductions, communications, fees, support and the handover into servicing.
Identify the information each firm needs. Specify the product, target-market, value and outcome information required to perform its role. Give information requests a clear purpose.
Record the basis for reliance. Explain what you rely on, why that is reasonable and what would prompt further enquiry. Consider relevant due diligence, the quality of information received and experience of the relationship.
Agree escalation and corrective action. Name contacts, set response expectations and decide how recurring issues will be investigated. Make sure concerns raised by frontline staff reach people able to resolve them.
Test the arrangement in practice. Follow a real complaint or customer-support issue across the businesses. Check whether ownership remains clear and whether the customer receives a timely response.
These are practical preparation steps that can be taken now, the review should also identify any separate obligations arising from the firm’s permissions, principal or outsourcing arrangements, and contracts.
Our view is that the best use of the proposed clarification is to make responsibility easier to explain and act on. Each firm should be able to show what it controls, what it reasonably relies on and how it responds when the evidence suggests customers are being let down.
RB Compliance Support
We can review your Consumer Duty framework, map responsibilities across lender and broker relationships, assess the information supporting your decisions and provide practical staff training. Our gap analysis and continued support can help turn identified weaknesses into clear actions.
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