Consumer Duty Board reports: The hard work lies ahead
The FCA’s recent blog on the second year of Consumer Duty Board reports provides a clear and timely stocktake of where firms are making progress, where weaknesses remain, and what supervisors will expect to see as firms move into the third year of reporting. However, it should also act as a warning shot for firms. Whilst the communication shows that firms are getting better at producing Consumer Duty Board Reports, the FCA’s focus has now shifted decisively to whether these reports actually evidence good customer outcomes, and whether Boards can demonstrate robust challenge rather than simply accepting the story they are told.
Overall, the message is balanced but firm. The FCA has acknowledged that progress has been made, particularly in addressing the more straightforward requirements, but it has also been clear that many firms still fall short when it comes to some of the harder aspects of Consumer Duty implementation. For example, the regulator highlights weaknesses in end‑to‑end outcomes monitoring, oversight of third‑party providers, evidencing meaningful Board challenge, and deeper assessment of customer understanding and support.
What the FCA says is working well
The FCA recognises that many firms have strengthened board engagement and governance frameworks. In some cases, boards are receiving more structured data, better articulation of required actions, and clearer accountability. This reflects growing ownership of Consumer Duty at the top of organisations, which remains a fundamental regulatory expectation, but can also be said to be one of the ‘easier’ aspects of Consumer Duty implementation.
However, the FCA has made clear that board engagement alone is not enough unless it is underpinned by meaningful challenge and data that is clearly linked to the consideration of impacts of products and services on customers.
Where firms are still falling short
A key area of concern is that Boards are not receiving a level of analysis of data that goes beyond the basic provision of management information. Too often, firms are providing data without clearly linking it to good or poor customer outcomes or conducting qualitative analysis to explain trends, identify emerging or crystallised risks or explain impacts or required remedial actions. A recurring issue we see is that Boards are presented with increasingly polished MI, but without the supporting narrative that explains what it means and brings it all to life.
The FCA has also highlighted weaknesses in monitoring outcomes across the distribution chain. For firms operating through intermediaries or third parties, there is often insufficient oversight (which may be driven by the firm’s own choices, or by the reluctance of those intermediaries or third parties to participate in the testing or provide the data requested). This remains a significant maturity gap, and many firms assume that contractual controls, attestations or high‑level reporting provide sufficient comfort, yet struggle to evidence how their products and services are performing for end customers in practice. The FCA’s intention to consult on distribution chain rules should be seen as a clear warning signal. Firms that fail to test their understanding of customer outcomes across the whole product lifecycle, including where distribution or servicing activities are undertaken by third parties, risk discovering blind spots only once regulatory expectations have hardened.
In addition, the FCA has called out a lack of documented board challenge. If boards are questioning the information that is presented to them, this is rarely being captured clearly, making it difficult to demonstrate effective governance and decision-making. We frequently see firms overestimate the strength of their governance because challenge is happening informally but not clearly evidenced. From a regulatory perspective, undocumented challenge is difficult to defend.
Finally, the FCA expects to see stronger assessment of the Consumer Duty outcome areas of consumer understanding and consumer support. These areas continue to be less mature than price and value and product and service outcomes, largely because firms often struggle to define what “good” looks like, what should be tested, and which data genuinely demonstrates positive customer outcomes. This is where many firms hit a ceiling, and where deeper, more structured thinking is required.
How Avyse can help
Whether you’re struggling to understand how to translate FCA expectations into your organisation or want a fresh set of eyes to check and challenge your report, Avyse is able to help you. We support firms through a variety of approaches that are tailored to your individual firm requirements across the product governance and Consumer Duty framework, end‑to‑end.
Consumer Duty outcomes testing. Designing and delivering meaningful outcome testing across the end‑to‑end customer journey that helps Board understand whether customers are experiencing good outcomes in practice, with a particular focus on consumer understanding and consumer support. We help firms move beyond high‑level MI to testing that demonstrates how customers actually experience products and services. For example, testing of customer understanding, support journeys, or specific product and cohorts where risk to outcomes are highest.
Independent review and challenge of Board reports. Providing an independent fresh set of eyes to assess whether your Consumer Duty Board report genuinely evidences good outcomes, highlights the right risks, and demonstrates appropriate challenge and oversight ahead of potential FCA review. This includes sense-checking conclusions against evidence or strengthening how risks and action plans are articulated.
Defining what “good” looks like. Helping firms translate FCA expectations into practical, workable frameworks, including clearer outcome definitions, consistent testing methodologies, and robust evidencing standards that can be consistently assessed and evidenced at Boards. For example, defining measurable outcome standards Boards can use to challenge and measure performance.
MI and governance enhancement. Supporting the development of MI so that Board reporting genuinely enables insight and effective challenge, rather than reporting for reporting’s sake, and strengthening governance arrangements so Consumer Duty remains embedded in day‑to‑day decision‑making. This may include refining MI packs or improving escalation where outcomes are deteriorating.
Board and senior management support. Briefing Boards on evolving FCA expectations and emerging areas of focus, the questions they should be asking, and how to evidence effective challenge, while supporting first‑line teams to take greater ownership of Consumer Duty outcomes. For example, targeted Board briefings or working with business teams to embed outcomes thinking into everyday processes.
Targeted gap analysis and remediation planning. Identifying where current approaches fall short, prioritising remediation activity, and supporting firms to focus effort where regulatory risk and customer impact are greatest. This includes mapping current practices against FCA expectations to focus effort where it matters most.
As firms move into Year 3 of Consumer Duty, many are recognising that producing a compliant report is no longer enough. Consumer Duty remains a collective responsibility, and with the right focus, firms can turn regulatory expectation into better outcomes for customers and stronger, more resilient governance.