UK FCA Reviews Firms’ Consumer Outcomes Monitoring

In a blog post published this week, Charlotte Clark, Director of Cross-Cutting Policy and Strategy at the UK Financial Conduct Authority (FCA), reviews firms’ approaches to outcomes monitoring under the Consumer Duty.

Clark writes that the strongest approaches are “structured, evidence-based and focused on using information to identify risks.” These firms define good customer outcomes, link them to specific stages of the customer journey, and translate them into measurable indicators. They can also show how management information informs decisions, prompts action, and tests whether interventions reduce harm or friction. Clark notes that effective monitoring does not depend on scale. Some smaller firms focus on a limited number of points where customers face a greater risk of harm and track those risks using existing indicators.

Other firms rely on reactive or poorly defined metrics, lack clear audit trails, or cannot demonstrate how information leads to action. Clark says firms should be able to explain why particular metrics and tolerances were selected and whether their responses are effective. She also emphasizes oversight of third parties and distribution partners. “Customers experience a product or service as a whole,” she writes. “They are unlikely to distinguish between the firms involved in delivering it.”

Clark reports stronger board and senior management engagement, with clearer accountability, stronger governance arrangements, and better tracking of remedial action. The FCA nevertheless expects more evidence that boards are challenging assumptions, scrutinizing customer outcomes, and driving improvements. “The firms making the strongest progress aren’t necessarily collecting more information,” Clark concludes. “They’re using it more effectively to understand their customers, identify harm earlier and drive meaningful improvements.”

In a Good Counsel article from Starling’s 2023 Compendium, Gibson Dunn Partners Michelle Kirschner and Matthew Nunan discuss the UK’s Consumer Duty, and how such “Outcomes-Based” legislation can drive culture improvements and strengthen public trust.

“Implemented properly, the Consumer Duty gives firms the opportunity to re-evaluate their business models and processes,” they argue. “There is a real market opportunity for firms that can demonstrate to their customers the actions they take to deliver good outcomes — where consumers feel their interests are well served by a firm, customer retention and loyalty is likely to improve, leading to more business for the firm in a virtuous circle.” ▸ Read More