CP26/23: what proportionality means for small firms' evidence burden
The FCA's summer consultation (CP26/23) asks whether the Consumer Duty is too heavy for smaller firms. Worth watching for every 1–5 adviser firm in the country.
But here is the thing about proportionality: it proportionates the process, not the evidence.
A three-adviser firm does not need a compliance department. It still needs to show its reviews happened, what they found, and what changed. The Duty fits small firms. The evidence burden is what never did — because it was built for firms with people to spare.
Automate the evidence, and proportionality takes care of itself.
What CP26/23 actually asks
CP26/23 is the FCA's consultation on the scope of the Consumer Duty and how the rules apply proportionately to smaller firms: what falls in and out of scope, and where requirements — including the scale of the monitoring and annual assessment cycle — can be scaled for firms of different sizes. The scope questions matter, and the answers are not settled.
It is a consultation, not final rules. The Consumer Duty publications library is where firms track whether and how the final position lands, alongside the ongoing requirements review.
Whatever the outcome, the duty's core requirement stands: every firm acting for retail customers must deliver good outcomes across the four outcome areas and be able to demonstrate them. The FCA's Consumer Duty pages set out that baseline; CP26/23 is about how the demonstration scales, not whether it happens.
What proportionality means at file level
Proportionality proportionates the process, not the evidence. A three-adviser firm's smallest defensible version is the same shape as a large firm's, just lighter: a fixed rubric, every file scored against it, gaps tracked with owners, one page to the board, and the annual assessment pointing at the same records.
What scales is the machinery, not the record. A large firm runs committees and monitoring systems; a small firm runs the same evidence chain with less of it. The content of the record stays the same — reviews performed, results, gaps, changes — because that is what a reviewer reads regardless of firm size.
A worked example: proportionate, not exempt
Before
“We're small, so we've treated monitoring as optional under proportionality.” No rubric, no scores, no board page, no annual assessment record. The firm is relying on a word that does not mean what it thinks.
After
The lean version: rubric rev 2, 12 checks; 12 reviews logged this quarter — 9 pass, 3 amber on cost disclosure, one fixed and re-scored; a gap list with owners; a quarterly board page; and the annual assessment entry points at the same records. The same evidence a larger firm would hold, built by three advisers with a spreadsheet.
Common mistakes in reading proportionality
- Treating proportionality as an exemption from evidence. It is a scaling mechanism for the process, not a waiver of the demonstration — which is why the smallest defensible version is still a version.
- Waiting for final rules before building anything. The evidence set is the same shape under any outcome; the firm that builds it now is simply ahead.
- Building a framework instead of a process. The burden is in the framework — the policies, committees, and templates. Small firms fail by building one, not by lacking one.
- Conflating scope exclusions with relief from outcomes. A product or activity out of scope is out of scope; the outcomes for the retail customers you do act for are not.
The proportionate evidence set
| Evidence artefact | The proportionate version |
|---|---|
| Review rubric | One fixed, versioned rubric — the same checks every time. |
| Graded log | Every review scored, with counts and check-area breakdowns. |
| Gap fixes | Findings with owners and closure dates. |
| Board summary | One page, quarterly, with the trend. |
| Annual assessment | The same records, assembled once a year. |
Related reads
The proportionate evidence set is the same evidence set the duty asks for everywhere. See the Consumer Duty outcomes monitoring hub for how it comes together, the board report for the page it lands on, and an FCA information request for how a reviewer tests it.
Frequently asked questions
Is CP26/23 final, or is it still a consultation?
It is a consultation. CP26/23 asks how the Consumer Duty should apply proportionately to smaller firms — what falls in and out of scope, and where requirements can be scaled. The FCA's Consumer Duty publications library is where firms track whether and how the final position lands.
Does proportionality mean a small firm can stop monitoring?
No. The duty's core requirement stands for every firm acting for retail customers: deliver good outcomes across the four outcome areas and be able to demonstrate them. Proportionality scales how the demonstration is built, not whether it happens.
What should a small firm do while the consultation plays out?
Build the smallest defensible evidence set now: a fixed rubric, graded logs, a gap list with owners, and a board page. It satisfies the FCA's stated expectations whatever the consultation outcome, because the demonstration requirement is not in scope for change.
Your next step
The consultation outcome matters less than the record you hold when it lands. Fix the rubric, run one quarter properly, and keep the graded log, the gap list, and the board page. Proven Duty runs the lean cycle end to end without a compliance department — the evidence set exists from the first file. Talk to us about your firm's evidence set or start a free trial.