UK FCA Reviews Consumer Duty Board Reports

In a blog post published last month, Jonathan Pearson, Head of Consumer Policy at the UK Financial Conduct Authority (FCA), reviews the second cycle of Consumer Duty board reports, identifying where firms have made progress and where further work is needed ahead of the third reporting cycle.

Under the Consumer Duty, firms are required to report annually on what their monitoring found about customer outcomes and what actions they will take as a result. In the second year under the regime, the FCA found meaningful improvement in governance and board oversight. “The good news: the Duty is making a difference,” Pearson writes. “Firms are continuing to mature in how they use data and insights to understand their customers’ experiences. Boards are more actively shaping and scrutinising this work.”

Boards are now formally reviewing and approving reports, while action plans are more comprehensive, Pearson observes. Firms are also drawing on a wider range of data to demonstrate customer outcomes, including trend analysis, root cause assessments, and comparisons across customer groups. Many firms have retained their Consumer Duty Board Champion, which he describes as reflecting a recognition that “senior accountability is central to cultural change.”

Pearson also identifies several areas requiring further attention. Some firms, he notes, presented extensive data without sufficiently explaining how it demonstrated good or poor outcomes. Boards must push for “analysis that goes beyond management information dashboards,” he argues, drawing clear conclusions and identifying emerging risks. Firms should also be “prepared to challenge their own practices where the data suggests that customers may not be getting good outcomes.”

Monitoring of outcomes in distribution chains remained weak, Pearson adds, particularly where firms rely on intermediaries or outsourcing partners. The FCA intends to consult on changes to rules and guidance in this area during the year. Boards also failed in many cases to adequately document the challenge they had provided, he warns, making it difficult to assess how senior leaders had tested the evidence before them.