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As firms prepare for their third annual Consumer Duty Board report, the FCA is now focused on how firms
21/05/26
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Five Consumer Duty priorities to refine for your third Board report
As firms prepare for their third annual Consumer Duty Board report, the FCA is now focused on how firms are building on early progress.
In its recent reflections, as outlined by the FCA’s head of consumer policy, Jonathan Pearson, many firms have made clear progress from their year one to year two Board report. Boards are reported as more engaged, with stronger governance and a broader use of data to understand customer outcomes being documented. But the regulator was equally clear that this progress now needs to continue and deepen as firms move into the third reporting cycle.
Year three is less about demonstrating effort and more about evidencing effectiveness. Based on the FCA’s latest observations, there are five areas firms should be paying close attention to as reporting deadlines approach.
1. Explain what the data says about outcomes – not just what it tracks
The FCA remains concerned that many firms stop short of explaining what that data shows about customer outcomes in their management reporting.
Dashboards and metrics on their own are not enough. Boards need to understand how indicators relate to the real customer experience, where outcomes are deteriorating and why management believes certain results are acceptable. When trends are negative or vary across customer groups, the Board report should draw clear conclusions and signal the actions being taken.
2. Make Board challenge visible and meaningful
Stronger governance was an evident improvement between year one and year two reports.
Boards are no longer just being “shown” the Consumer Duty report – they are formally examining it, challenging it and approving it as their own view of how the firm is delivering good outcomes.
For year three, the FCA wants to go further and see evidence of challenge, not just oversight. That means showing how Board scrutiny has tested assumptions, interrogated areas of risk and influenced priorities. Where management has been asked to revisit analysis, improve data quality or strengthen action plans, this should be reflected in the report.
3. Strengthen oversight of outcomes delivered through third parties
Oversight of distribution chains and outsourced activity remains a key area where the FCA believes firms need to do more.
Year two reports often acknowledged reliance on intermediaries, appointed representatives (ARs) or third-party providers, but provided limited insight into how outcomes are monitored in practice. As firms approach their third report, the expectation is that this gap should continue to narrow.
Boards should be able to see what outcome related data is obtained from third parties, how it is assessed and where limitations exist. Critically, firms should be clear about how they are dealing with areas where visibility over customer experience is weaker than they would like.
4. Deepen analysis of consumer understanding and support
Consumer understanding and consumer support are areas where the FCA has encouraged firms to develop more confidence in their assessments.
High‑level indicators such as satisfaction scores or complaint data may form part of the picture, but they rarely tell the full story. For year three, firms should demonstrate how testing, behavioural insights and interaction monitoring are used to assess whether communications help customers make informed decisions.
Similarly, support outcomes should be considered across the full customer journey, including how quickly and effectively customers receive help when circumstances change or difficulties arise. In that light, Boards should increasingly expect to see analysis that identifies friction and vulnerability, not just positive signals.
5. Show how Consumer Duty insight is shaping decisions
Perhaps the most important shift as the Consumer Duty matures is demonstrating how insight leads to action.
The FCA has highlighted examples where effective Board reporting has driven better product design, clearer communications and quicker remediation of emerging harm. In contrast, reports that describe processes without showing impact are unlikely to meet expectations in year three.
A credible Board report should show where Consumer Duty monitoring has materially influenced decisions – including where activity has been changed, paused or stopped altogether. This is where governance moves from compliance to culture, and where reports demonstrate real strategic value.
Looking ahead
The FCA has been clear that Consumer Duty Board reporting should continue to evolve. What was considered a strong report in year one or year two may no longer be sufficient as expectations rise and supervision becomes more outcome‑focused.
With the time to compile the third Board report approaching, independent insight can provide valuable reassurance. TCC works alongside firms to review, test and strengthen their Consumer Duty approach, helping ensure that evidence, governance and outcomes are robust and sustainable. Get in touch to learn how we can help your firm.