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The Financial Conduct Authority (FCA) has published a thematic review of 180 firms’ Consumer Duty board reports, shedding light on how firms are embedding the Duty and the challenges they face.

The review highlights the FCA’s focus on ensuring firms deliver meaningful improvements for customers while maintaining robust governance and oversight.

This analysis emphasises that Consumer Duty is not merely a regulatory obligation but a critical lens through which firms must view their operations. The FCA’s findings provide valuable insights into what firms are doing well and where significant gaps remain.

Five aspects of good reports

1. Clear outcomes focus: high-performing reports dedicated specific sections to each of the four Duty outcomes, supported by detailed definitions of what good outcomes look like for customers.
2. Data-driven insights: effective reports utilised strong Management Information (MI) with clear commentary and measurable thresholds to back their conclusions.
3. Customer segmentation: some firms demonstrated robust analysis of outcomes across different customer groups, particularly those with vulnerabilities.
4. Board engagement: firms that evidenced board challenge and active involvement, including Consumer Duty Champions, showed stronger oversight and accountability.
5. Cultural alignment: good reports emphasised a firm-wide commitment to embedding Consumer Duty principles, reflected in training initiatives and leadership involvement.

Five areas for improvement

1. Data quality: many firms lacked sufficient MI to justify their conclusions or assure boards that customer outcomes were being met.
2. Distribution chains: reports often failed to demonstrate oversight of third-party relationships, leaving gaps in assessing outcomes across the value chain.
3. Board challenge: evidence of active board engagement and critical scrutiny was inconsistent, with some boards appearing to act as rubber stamps rather than governance bodies.
4. Action plans: many action plans were vague, lacking timelines, clear ownership, or metrics to measure success.
5. Customer vulnerability: firms often treated vulnerability as a broad category, without addressing the distinct needs of specific vulnerable groups.

Our recommendations

The FCA’s findings highlight that embedding Consumer Duty is a journey, requiring ongoing refinement and commitment. The main aim of the board report is to provide an assessment to the governing body to determine if good outcomes have been achieved over the preceding year and any actions that need to be taken to address poor customer experiences.

Based on our teams’ experience of working with a range of firms in implementing Consumer Duty practices and board reports, firms should focus on the following areas:

• Strengthen board reporting and oversight: ensure board reports are clear, concise, and actionable, incorporating input from all business areas. Provide robust MI that is well-explained and linked to customer outcomes, with clearly defined thresholds for monitoring.
• Enhance distribution chain governance: develop processes to assess and monitor third-party relationships, ensuring that outcomes across the value chain align with the Duty’s principles.
• Focus on vulnerable customers: move beyond generic approaches to vulnerability and adopt targeted measures to address the needs of distinct groups, supported by specific data and case studies.
• Create robust action plans: include specific actions, timelines, and metrics in response to identified risks, ensuring that improvements can be tracked and measured effectively.
• Embed culture across the organisation: reinforce Consumer Duty through leadership involvement, comprehensive training, and alignment of performance management systems with customer outcomes.

By implementing these steps into their Consumer Duty framework, companies can ensure they are maintaining compliance with the FCA’s higher standards for consumer protection and safeguarding themselves against any potential penalties in the future.

Looking ahead

The FCA’s review serves as a clear reminder that Consumer Duty is central to the regulatory agenda. Firms must treat this as an opportunity to align their operations with customer-focused values while strengthening governance structures.

By acting on these insights, firms can not only meet regulatory expectations but also build trust, differentiate themselves in the market, and drive long-term success. The FCA has signalled that scrutiny will only intensify, making now the time for firms to ensure they are truly delivering on their Consumer Duty commitments. This review is not just a reflection of past performance, it’s a roadmap for the future.

For more information on Consumer Duty or for enquiries on Board Reports and implementing frameworks, please get in touch with one of our experts by emailing: info@thistleinitiatives.co.uk.