FCA raises the bar on Consumer Duty outcomes monitoring: what your firm needs to do now

Good practice firms defined good outcomes for each of their key products, not a single broad statement, and described what customers should experience at key stages such as joining, using the service and leaving, linking those statements directly to customer journeys so they could see where poor outcomes could happen.  By contrast, some firms' monitoring frameworks were not clearly focused on customer outcomes or the risks of harm, and did not have a clear structure for identifying poor outcomes or understanding why they happened.

Good practice involves looking at specific details of different parts of the customer journey, rather than simply having high-level indicators of overall outcomes, helping firms build a clearer picture of how outcomes develop and identify where customers may be at risk of harm.  Some firms used operational activity metrics, such as conversion rates or review completion, as a proxy for customer outcomes, but did not define good or poor outcomes for customers at different stages of the journey.

One good-practice firm used its past performance to set targets for tracking customer outcomes, reviewed and challenged those targets through governance to make sure they were not too easy to meet, and in some cases set targets above historic performance to encourage improvement.  Many firms, however, set specific thresholds but could not clearly explain how those thresholds indicated good or poor outcomes, the stronger examples explained why each threshold was meaningful for identifying potential harm.

The strongest firms could demonstrate a clear link between the information they collected, the decisions they made and the actions they took.  Some firms collected relevant MI but could not show how it helped them make decisions or improve customer outcomes, for example, one firm monitored a range of areas but did not consistently show what MI it considered, where it discussed or challenged the MI, what decisions it took, when it took action, or how it assessed the impact.

Some firms found friction in their customer support and agreed remedial action, but some issues persisted, for example, one firm identified unclear live chat interactions and agreed a set of actions, but later evidence showed it was still passing customers between agents and did not always resolve complex issues first time.  Evidence was stronger where firms tested whether interventions reduced repeat contact, avoidable customer effort and unresolved journeys, rather than relying only on the fact that they had agreed some actions.

Some firms monitored outcomes for customers in vulnerable circumstances separately to other customers, but did not segment those outcomes by vulnerability drivers, for example, one firm aggregated its vulnerability MI rather than splitting it by drivers such as health, financial resilience or life events.  Aggregated MI can make it harder to identify whether different groups of customers with characteristics of vulnerability have different needs or experience different barriers and outcomes.

The FCA has seen stronger board and senior management engagement compared with earlier reviews, and many firms now have clearer accountability, better action tracking and stronger governance arrangements.  However, boards are usually given regular updates on customer outcomes and described as central to oversight, but it is not always clear how they use this information, with many focusing on reviewing and approving reports rather than challenging them or pushing for further action, making it hard to see how boards shape decisions or drive improvements.

Firms using third parties to deliver part of their services are still responsible for their customers' outcomes, and the FCA saw positive examples of firms using MI, regular reviews, escalation routes and checks to improve customer outcomes where firms relied on outsourced providers or suppliers.  Firms often refer to regular engagement with third parties, but it is not always clear how they track outcomes relevant to their activities across these relationships, or how this leads to appropriate action.

The FCA expects all firms to deliver good outcomes for their customers regardless of size, and smaller firms can use a focused set of indicators without complex systems or large teams, what matters is that firms can explain what their information shows, how it helps them identify harm or poor outcomes, and what they do in response.  However, some smaller firms took a largely informal approach to defining and monitoring outcomes, relying on experience of dealing with customers rather than clearly setting out what good and poor outcomes look like in practice.

Many firms place a strong emphasis on culture and usually support this with training and internal communications about the Duty, but this often amounts to describing a culture at a high level rather than it being how the organisation operates in practice, there is often no evidence of how firms' culture actually affects their decisions, how they hold people accountable, or how they check if their approach is making a difference.