FCA Supervisory Statement on co-manufacturing under the Consumer Duty

As per the FCA’s letter to the Chancellor on 30 September 2025 (see our article on that here: Consumer Duty 2.0? FCA announces plans to streamline its rules), on 8 December 2025, the Financial Conduct Authority (the FCA) issued a short statement to clarify its expectations for firms collaborating in the manufacture of products or services, particularly in the context of the Consumer Duty (the Duty).

Background and purpose

This follows feedback to the FCA that firms have encountered challenges in applying the Duty rules when working together to manufacture products or services. The statement aims to provide clarity on supervisory expectations and to support proportionate application of the rules. Importantly, the statement does not introduce new requirements or standards, but rather clarifies existing expectations. Firms that have already implemented appropriate measures are not expected to revisit their approach in light of this statement.

Implications for firms

The implications for firms are fairly light-touch. The FCA has confirmed that it is not introducing any new requirements and that existing contracts do not need to be reopened in light of this Statement. As long as firms maintain clear records of roles and responsibilities (which they are currently obliged to do in a co-manufacturing agreement), no changes should need to be made. Disappointingly, the FCA does not offer any guidance around who is considered a co-manufacturer, despite this being an area of ongoing practical difficulty for many firms. We would expect further guidance on identification to be addressed in next year’s Consumer Duty consultation.

FCA’s future approach

The FCA plans to review and consult on amendments to the rules in the first half of 2026. Areas under consideration include:

• Clarifying the scope of the Duty and when it applies.
• Reviewing the effectiveness of existing exemptions, particularly for business-to-business activities which should not be captured.
• Considering further exemptions where firms are subject to other regulatory obligations. The FCA does not elaborate on what these may include but we note this is an area of active industry engagement, particularly for retail structured products.
• Providing greater clarity on when and how firms can rely on each other within distribution chains.

Stakeholders are invited to engage with the FCA ahead of the consultation.

Current supervisory expectations

The FCA’s supervisory focus is on ensuring that:

• Firms correctly identify which entities are involved in the manufacture of a product or service offered to retail customers.
• Where multiple firms are involved, there is a written agreement that clearly allocates responsibilities, reflecting the actual roles of each firm. Existing contracts can fulfil this requirement, and duplication of effort is not expected.
• The effective and appropriate allocation of responsibilities is prioritised over formalistic or duplicative arrangements.

Key clarifications for firms

The FCA addresses several misconceptions:

• Decision-making: Firms working together are not required to participate in each other’s decisions or engage in joint decision-making. Distinct roles and responsibilities can remain separate, provided they are clearly agreed and documented.
• Allocation of responsibility: Responsibilities do not need to be evenly split. One firm may take on most requirements if this reflects the reality of the arrangement.
• Liability: Generally, a firm is only liable for harm it has caused. However, regulatory requirements or contracts may sometimes make a firm responsible for harm caused by another in the distribution chain.
• Outsourcing: Where a firm outsources an activity, it remains responsible for compliance with regulatory obligations relating to that activity, even if the service provider is also an authorised firm. Both firms may have responsibilities under the Duty in such cases.

Scope and exclusions

The statement applies to rules under the Consumer Duty (PRIN 2A.3 and 2A.4), as well as similar rules in PROD 3, PROD 7, and the forthcoming DISC rules. It does not address insurance manufacturers subject to PROD 4, nor does it cover arrangements involving unregulated parties.