How to Prepare Your Next Board Report Now
The next Consumer Duty board report is closer than many firms think.
With most firms approaching their second annual assessment, recent commentary from the Financial Conduct Authority makes it clear that expectations are evolving. The focus is no longer on whether firms have implemented the Duty, but on whether they can evidence that it is working in practice.
For compliance and operational teams, this creates a clear priority. Preparation for the next board report should already be underway.
Moving beyond year one
The first round of Consumer Duty reports was largely about establishing a baseline.
Firms focused on frameworks, identifying key metrics and building out management information. That was necessary at the time. It provided structure and demonstrated initial compliance.
Year two is different.
The FCA expects to see progression. This includes clearer evidence of outcomes, stronger analysis of risks and, importantly, demonstrable action taken in response to what firms have learned.
A report that looks similar to last year’s, with limited development, is unlikely to meet expectations.
What the FCA is looking for now
The FCA has been clear that board reports should reflect how firms are actively monitoring and improving customer outcomes.
In practice, this means showing how data is used to identify issues and how those issues are addressed. It is not enough to present metrics. Firms need to explain what those metrics mean and what decisions have been taken as a result.
There is also a stronger emphasis on areas where outcomes are not meeting expectations. The regulator is looking for evidence that firms can identify weaknesses and respond appropriately, rather than simply highlighting areas of good performance.
This requires a level of honesty and clarity that goes beyond reporting for compliance purposes.
Strengthening management information
Management information remains central to the report.
However, the focus is shifting towards how well that information explains customer outcomes over time. Firms should be able to show how different customer groups are performing, where risks are emerging and how trends are developing.
This often requires more effective segmentation. Looking at aggregate data alone is unlikely to provide sufficient insight. Differences between new and existing customers, product types or distribution channels can be significant and should be clearly understood.
The key question is whether the data tells a coherent story.
Linking insight to action
One of the areas the FCA is increasingly focused on is the link between insight and action.
Board reports should clearly demonstrate how findings have led to change. This might include adjustments to underwriting, changes to customer communications or improvements in how customers in financial difficulty are supported.
Without this connection, reports risk becoming descriptive rather than meaningful.
The expectation is that the board is actively engaged in reviewing outcomes and driving improvement.
Avoiding common pitfalls
A number of issues are beginning to emerge across the sector.
Some reports remain too focused on process rather than outcomes. Others lack clear explanation of what the data shows or how conclusions have been reached. In some cases, there is limited evidence of challenge or decision-making at board level.
These gaps can undermine the overall effectiveness of the report.
A practical way to address this is to review whether an independent reader could understand the firm’s position. If the narrative is unclear internally, it is unlikely to be clear to the regulator.
Starting preparation now!
Given the level of expectation, leaving preparation until the final weeks is not realistic.
Firms should already be reviewing their current MI, identifying gaps and considering how to demonstrate progression since the previous report. This includes ensuring that data is reliable, analysis is robust and decisions are properly documented.
Early preparation also allows time for internal challenge and refinement, which is often where the greatest value is gained.
How ALPH Legal & Compliance Can Support
ALPH Legal & Compliance supports consumer credit firms in preparing Consumer Duty board reports that meet FCA expectations.
We work with firms to review existing reports, assess management information and ensure that outcomes, risks and actions are clearly evidenced. This includes identifying gaps, strengthening narrative and supporting board-level engagement.
As expectations continue to evolve, firms that approach their next report as a genuine assessment of outcomes, rather than a compliance exercise, will be far better positioned to demonstrate effective governance.