FCA CP25/37: Targeted Clarifications of Handbook Materials

The Financial Conduct Authority (the FCA) has published Consultation Paper CP25/37, ‘Targeted Clarifications of Handbook Material’”, as part of its ongoing Consumer Duty Requirements Review (9 December 2025). The FCA is seeking stakeholder views on targeted clarifications and simplifications to its rules and guidance, with the aim of:

• Resolving uncertainty and removing outdated or superseded requirements;
• Introducing greater proportionality and clarity; and
• Addressing conflicts and duplication within the Handbook.

This initiative forms part of the FCA’s broader Consumer Duty Requirements Review (CDRR), following a July 2024 Call for Input and the March 2025 Feedback Statement (FS25/2), see our Consumer Duty View on those here. The proposals are designed to support the FCA’s 2025-2030 strategy, focusing on smarter regulation, supporting growth, and helping consumers navigate financial services, see our article on that here.

Key implications for firms and next steps

The FCA’s proposals are designed to reduce the administrative burden on firms by streamlining compliance requirements, removing duplication, and allowing firms to focus their resources more effectively on delivering good consumer outcomes.

The consultation aims to bring clarity to regulatory expectations by removing outdated or overlapping rules and aligning Handbook references with the Consumer Duty. The proposed changes, however, are rather limited. Importantly, the proposals do reinforce the need for firms to ensure that their practices, especially those relating to client money, custody assets, and product governance, are fully compatible with the higher standards of the Consumer Duty.

In terms of implementation, most rule changes are proposed to take effect immediately following the publication of the Policy Statement, anticipated in the second quarter of 2026, with a three-month lead-in period for changes to the Client Assets Sourcebook (CASS). Firms that are already compliant with existing rules will be deemed compliant with the new rules, as the FCA is not introducing substantive changes to its expectations. As a result, firms should review the consultation in detail, assess the operational impact of the proposed changes, and consider submitting feedback to the FCA ahead of the 27 January 2026 deadline.

Key Proposals

The consultation covers a range of sectors and Handbook chapters. The main proposals are as follows:

1. Technical changes to the Collective Investment Schemes Sourcebook (COLL)

• Proposal to delete COLL 5.2.29R(3) and (6), which restrict UK UCITS schemes’ investments in other collective investment schemes (CIS), on the basis that other COLL provisions already address the intended outcomes.
• The FCA believes this will simplify compliance for authorised fund managers (AFMs) and reduce unnecessary administrative burdens.

2. Amendments to the Client Assets Sourcebook (CASS)

• Record-keeping: Amend due diligence record retention requirements so that records must be kept for five years from creation/modification, rather than five years after the end of the third-party relationship (CASS 6 and 7).
• External custody reconciliations: Permit use of Euroclear UK & International’s (EUI) Investment Funds Service (IFS) System Record for reconciliations, subject to conditions (CASS 6).
• Reconciliation frequency: Allow less frequent reconciliations where third-party statements cannot be obtained monthly, with appropriate documentation and controls (CASS 6).
• Clarification of the application of the Consumer Duty to CASS rules for retail clients, particularly regarding retention of interest on client money and use of custody assets for securities financing transactions (SFTs) (CASS 6 and 7).
• Flexibility for treatment of bank interest received into client accounts, including scenarios where interest is received before it is due to clients or where it is owed to the firm (CASS 7).

3. Updating and removing references to Principles 6 (Treating Customers Fairly (TCF)) and Principle 7 (Clear, Fair and not Misleading)

• The FCA proposes to update or remove outdated references to Principles 6,TCF and Principle 7 in the Handbook and non-Handbook materials, reflecting the introduction of the Consumer Duty (Principle 12 and PRIN 2A).
• The Responsibilities of Providers and Distributors for the Fair Treatment of Customers (RPPD) guide will be retired, as its content is now superseded by product governance and Consumer Duty requirements.

4. Simplifying insurance and funeral plan rules

• Removal of product-specific rules for payment protection insurance (PPI) and packaged bank accounts (PBAs), including eligibility and disclosure requirements, in light of the Consumer Duty’s higher standards.
• Deletion of the minimum 12-month product review requirement for funeral plan manufacturers, allowing a risk-based approach to review frequency.
• Removal of additional expectations for manufacturers and distributors regarding value measures data (PROD 4.5), as these are now addressed elsewhere in the Handbook.
• Deletion of the pricing record retention rule linked to the now-decommissioned General Insurance Pricing Attestation (REP022)

5. Smaller Firm Guide Discussion

The FCA has identified that smaller firms often struggle to identify which rules are relevant to them and would benefit from clearer, more accessible guidance, including practical examples. As such, the FCA is seeking views on piloting a directory-style guide with case studies for smaller firms, initially focusing on credit brokers in the consumer finance sector, to help them navigate and apply FCA requirements more effectively. The FCA is considering three main options:

1. Issue-specific guides: These would provide non-Handbook guidance on key topics, similar to existing FCA guidance on areas such as financial crime or the Senior Managers and Certification Regime (SMCR).
2. Directory-style guides: These would be concise documents signposting firms to the relevant parts of the Handbook and non-Handbook materials for their business type.
3. Enhanced use of good and poor practice documents: Building on the FCA’s published examples of good and poor practice, particularly in relation to the Consumer Duty.