FCA Highlights Good and Poor Practice in Consumer Duty Board Reporting

The FCA has made it clear that Consumer Duty board reports must evolve from narrative assurance to evidence-based governance.

The FCA has updated its webpage on Consumer Duty board reports, providing further clarity on supervisory expectations and practical insight into both good and poor practice.

While the guidance applies to firms of all sizes, the messaging for smaller firms is particularly clear.

Proportionality does not mean informality.

The regulator expects structured governance, defensible monitoring and demonstrable action, regardless of scale.

Boards must not only review outcomes but evidence how they know customers are receiving good outcomes and what steps are taken when this is not the case.

Clear Supervisory Message for Smaller Firms

The FCA has emphasised that smaller firms must still produce structured, outcome focused board reporting.

Proportionality may affect the complexity of monitoring, but it does not dilute accountability.

Firms must be able to:

• Articulate what good outcomes look like
• Justify the MI and thresholds they rely upon
• Demonstrate how identified issues translate into measurable remediation

High level assurances without supporting analysis are unlikely to withstand scrutiny.

Areas Where Firms Are Falling Short

The FCA identified recurring weaknesses across board reports, including:

• Over reliance on generic statements without supporting evidence
• Failure to define what constitutes a good outcome
• MI thresholds with no documented rationale
• Limited analysis of vulnerable customers and closed products
• Action plans lacking ownership, timelines or impact evaluation

Five core supervisory gaps were highlighted:

• Data quality deficiencies, with conclusions unsupported by robust MI or qualitative insight
• Limited visibility across distribution chains and third party intermediaries
• Insufficient customer segmentation, with outcomes not differentiated by customer type
• Weak evidence of board challenge and scrutiny
• Vague remediation plans without measurable follow through

The message is clear. Boards are expected to move beyond narrative reporting into structured oversight.

Expectations for Smaller Firms

The FCA recognises resource constraints, but it does not lower the standard.

Smaller firms are expected to:

• Embed clear governance structures with defined Duty ownership
• Use proportionate but meaningful MI
• Supplement limited data with qualitative insight such as complaints analysis and staff feedback
• Maintain action plans with named accountability, clear timeframes and defined success criteria

The regulator also noted that firms of all sizes were capable of producing high quality reports. The differentiator was not scale, but approach and rigour.

What Good Practice Looks Like

The FCA highlighted examples of board reports that:

• Clearly defined customer outcomes and linked MI to real customer experiences
• Segmented performance data by customer type, including vulnerable groups
• Demonstrated documented board level challenge over time
• Provided tangible examples of actions taken, their effectiveness and next steps

In contrast, weaker reports relied on:

• Blanket statements such as “no issues identified” without supporting analysis
• Generic RAG ratings with no defined thresholds
• Minimal attention to post sale servicing or closed product oversight

What Should Firms Do Next?

Firms should review their most recent Consumer Duty board report against the FCA’s updated feedback, particularly where simplified governance models are in place.

Key areas to consider include:

• Clearly defining and documenting what good outcomes mean for each product and customer group
• Reassessing MI thresholds to ensure they are evidence based and outcome driven
• Strengthening oversight of distribution chains and third party intermediaries
• Ensuring action plans include ownership, measurable objectives and follow up monitoring
• Enhancing analysis of vulnerable customer segments and closed products

Consumer Duty board reporting is no longer a compliance formality. It is becoming a supervisory test of governance depth.

Firms that approach this as a structured oversight exercise, rather than an annual reporting obligation, will be better positioned in future supervisory engagement.