FCA sets expectations for stronger outcome‑focused governance in Year 3 Consumer Duty board reporting

Stronger board ownership and governance

Boards are now formally reviewing and approving Consumer Duty board reports.

Reports increasingly include explicit confirmation that boards have:

• considered management actions; and
• concluded that the firm is meeting its Consumer Duty obligations.

Many firms have voluntarily retained a Consumer Duty Board Champion, reinforcing senior accountability and cultural embedding.

Clearer action plans and accountability

Firms are providing more structured action plans with:

• named accountable owners
• defined timelines
• progress tracking against actions

This is enabling more effective board oversight and follow‑up.

Broader and more insightful use of data to assess outcomes

Compared with year 1, firms are using a wider mix of quantitative and qualitative data, including:

• trend analysis
• root cause analysis
• comparisons across customer cohorts

Stronger reports explain:

• why metrics matter;
• how they reflect customer experiences; and
• what actions were taken where outcomes fell short

There is also better evidence of monitoring outcomes for vulnerable customers, supported by improved segmentation.

Failure to link data to customer outcomes

The FCA continues to see reports that present large volumes of data without explaining what the information means for customer outcomes.

Boards are expected to:

• challenge management MI
• demand clear conclusions
• identify emerging risks
• test whether firm practices are genuinely delivering good outcomes
  

Strengthen oversight of third parties and distribution chains

Monitoring of customer outcomes delivered by intermediaries and outsourced providers remains weak.

The FCA expects firms to take responsibility for outcomes, regardless of who interacts with the customer.

Firms should ensure third‑party oversight is reflected in:

• management information
• governance processes
• board scrutiny

The FCA has confirmed it plans to consult on changes to rules and guidance on distribution chains and will publish best practice examples.

Evidence meaningful board challenge

While boards are approving reports, many firms are not adequately documenting the challenge provided.

The FCA expects board papers and minutes to clearly record:

• key discussions
• questions asked
• follow‑up actions required

Weak documentation may undermine a firm’s ability to evidence effective governance.

Improve focus on consumer understanding and support

Some reports remain too focused on products and value, with insufficient attention on:

• consumer understanding
• customer support
  

These are core Consumer Duty outcomes.

Firms should be able to evidence how they:

• test customer communications
• assess customer comprehension
• identify and respond to misunderstanding or friction in customer behaviour

As firms prepare for their third Consumer Duty board report, the FCA expects further maturity. In practice, firms should consider:

• Stress‑testing MI, ensuring data clearly evidences customer outcomes, not just operational performance.
• Strengthening third‑party oversight: including explicit outcome monitoring for distributors and outsourcers.
• Improving board papers and minutes: clearly capturing challenge, decisions and follow‑up actions.
• Expanding testing of customer understanding: particularly for complex products, communications or vulnerable customer interactions.
• Re‑assessing action plans: ensuring clear ownership, progress tracking and board visibility.