Consumer Duty is entering a new phase.
For many firms, the first two years have been focused on implementation. Frameworks have been built, policies updated, governance structures enhanced and management information developed. Boards have received their first annual reports and firms have invested significant time and resource in embedding the requirements across their businesses.
The message from the Financial Conduct Authority is now changing.
The regulator is no longer primarily interested in whether firms have implemented Consumer Duty. The focus is increasingly on whether firms can demonstrate that it is delivering good customer outcomes in practice.
For directors, compliance professionals and operational leaders, this represents a significant shift.
The implementation phase is over
When Consumer Duty was first introduced, much of the focus was understandably on readiness.
Firms worked to understand the requirements, map customer journeys, develop outcome monitoring and establish governance frameworks capable of supporting the new regime.
That work remains important, but the FCA’s recent commentary suggests that firms should not expect to receive credit indefinitely for having implemented a framework.
The regulator now expects businesses to move beyond describing what they do and start evidencing what impact those actions are having.
In simple terms, firms are moving from implementation to demonstration.
The annual Board Report is becoming more important
For many firms, the annual Consumer Duty Board Report has become the focal point of Consumer Duty governance.
The FCA has made clear that it views these reports as a critical mechanism for assessing how firms understand and monitor customer outcomes. However, recent observations suggest that the quality and maturity of reports across the industry remains mixed.
Some reports clearly demonstrate how firms identify risks, assess outcomes and drive improvements. Others remain heavily focused on process, activity and assurance.
The distinction matters.
The FCA wants boards to be able to explain what their data is telling them, where customer outcomes could be improved and what actions have been taken in response. A report that simply confirms everything is working as intended is unlikely to provide the level of insight the regulator expects.
Data is becoming the foundation of supervision
One of the clearest themes emerging from FCA supervisory activity is the growing importance of data.
Consumer Duty is increasingly being assessed through evidence rather than narrative. Firms are being asked to demonstrate how they monitor outcomes, how they identify emerging risks and how those findings influence decision-making.
Importantly, the FCA is no longer limiting its attention to reports and summaries. Firms are increasingly being asked to provide the underlying data, management information and rationale supporting the conclusions presented to boards and senior management.
This represents a significant evolution in supervisory approach.
The question is no longer whether a firm has management information. The question is whether that information genuinely supports the conclusions being reached.
Outcome monitoring must drive action
The FCA has consistently emphasised that Consumer Duty is not a reporting exercise.
Its purpose is to improve outcomes.
This means firms should be able to demonstrate a clear link between the information they receive and the decisions they make. Where risks are identified, there should be evidence that action has followed.
This could include changes to customer communications, amendments to underwriting criteria, improvements to support for vulnerable customers or refinements to complaints handling processes.
The key point is that monitoring alone is not enough. Firms must be able to demonstrate how insight is translated into improvement.
Firms should start preparing now
For many firms, the next annual Consumer Duty Board Report is only a few months away.
That may sound like plenty of time, but meaningful preparation takes longer than many organisations expect. Data quality needs to be reviewed, management information assessed and outcome monitoring challenged. Any weaknesses identified will need time to be addressed before reporting is finalised.
This is also an opportunity to step back and consider whether current reporting genuinely reflects customer outcomes or simply measures activity.
The most effective reports are often those that challenge assumptions, identify areas for improvement and provide clear evidence of action.
What should firms be focusing on?
As firms prepare for the next reporting cycle, there are several areas worth particular attention.
First, review whether management information tells a coherent story about customer outcomes. Second, ensure that data can support the conclusions being presented to the Board. Third, consider whether identified risks are being translated into practical actions and improvements.
Finally, firms should be prepared to explain not only what decisions have been made, but why they have been made.
Increasingly, that rationale is what the FCA wants to understand.
How ALPH Legal & Compliance Can Support
ALPH Legal & Compliance supports consumer credit firms in preparing robust Consumer Duty governance and reporting frameworks.
We work with firms to review annual Board Reports, assess management information, challenge outcome monitoring and ensure that conclusions are supported by clear evidence. This includes independent reviews, gap analysis, Consumer Duty audits and practical support in preparing for regulatory scrutiny.
As the FCA moves from implementation to evidence-based supervision, firms that can clearly demonstrate how Consumer Duty is delivering good customer outcomes will be best positioned to meet regulatory expectations.
To discuss how ALPH can support your firm, speak to our team.