What FCA-Regulated Consumer Credit Firms Need to Include, Avoid and Act On in Year Two
The Clock’s Ticking Again!
As we approach the second anniversary of the FCA’s Consumer Duty, regulated firms are once again required to publish and present their annual board reports evidencing compliance with the Duty’s four key outcomes and cross-cutting rules. But this time, the FCA expects more than just compliance. It expects progress.
For firms in the consumer credit sector—including motor finance, HCSTC lenders, credit brokers, and general lending providers—this milestone isn’t simply a regulatory checkbox. It’s a crucial opportunity to demonstrate meaningful customer outcomes, robust data use, and evidence of challenge and oversight at board level.
What Your Year Two Consumer Duty Report Should Include:
– Outcomes-Focused MI & Data Analysis
- Demonstrate how you’ve used Management Information (MI) to test outcomes for real customers
- Trend analysis showing improvements (or red flags) over the past 12 months
- Breakdown by key customer groups, especially vulnerable cohort
– Root Cause Insights and Actions Taken
- Summary of key issues identified from complaints, QA, FOS cases or internal reviews
- How root causes were addressed and what changes were made as a result
– Fair Value Assessment Updates
- Evidence of reviews and actions taken to ensure ongoing fair value across products
- Pricing rationale, fee structures, commission models (especially for brokers)
– Board-Level Challenge and Governance
- How the board has scrutinised Consumer Duty compliance
- Decisions taken or escalations made as a result of reviews
– Outcome Testing Methodologies
- Description of how you test the four outcomes (products and services, price and value, consumer understanding, consumer support)
- Use of customer feedback, call listening, file reviews or shadow shopping
– Forward-Looking Improvements
- Clear plans for continuous improvement, product reviews, or culture shifts
- Resource, budget or system changes planned to support Duty delivery
What Should Be Avoided or Reassessed:
Generic Templates: The FCA has warned against boilerplate language. Your report must reflect your firm’s real-world decisions, data and customers.
Data Without Interpretation: MI alone isn’t enough. You must show analysis, insight, and board engagement.
Outdated Risk Maps or Reviews: Reviews or fair value assessments over a year old may not demonstrate ‘ongoing’ compliance.
Lack of Outcome Evidence: Saying outcomes are good without customer data to back it up will not meet FCA expectations.
Silence on Culture: Consumer Duty is about embedding change. The board report must show this isn’t a one-time compliance exercise.
How ALPH Legal & Compliance Can Support
ALPH Legal & Compliance specialises in helping regulated firms not just meet but meaningfully exceed their Consumer Duty obligations.
We provide:
- Board Report Drafting Support: We’ll help structure, write or review your second-year Consumer Duty report to ensure it is robust, data-led, and FCA-ready.
- MI & Outcome Testing Frameworks: Design of KPI dashboards, vulnerability MI, and outcome testing toolkits that drive continuous improvement.
- Governance & SMF Training: Coaching and support for boards, SMF16/17s and Compliance Officers to challenge, record and act effectively.
- Fair Value Review Services: Independent reviews of your pricing models, commission arrangements and product literature.
- End-to-End Gap Analysis & Action Plans: We benchmark your firm against FCA expectations and provide a structured action plan for improvements.
Final Thoughts
The FCA has made clear that Consumer Duty board reports are a regulatory priority. Don’t treat year two as a repeat of year one. It’s an evolution—and a key test of how seriously your firm is taking customer outcomes.
If you’re unsure where to start or how to elevate this year’s submission, ALPH Legal & Compliance is here to help.
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ALPH Legal & Compliance can assist with all aspects of your business’s compliance needs, whether that be compliance structure and policy, internal/external audit, business and regulatory change support, authorisation, supervision or just some general expert advice and guidance!
Take action now with ALPH Legal & Compliance services!
With all the regulatory shifts on the horizon, now is the time to act. Don’t wait until compliance gaps appear—engage with ALPH Legal & Compliance today to ensure your firm is ahead of the curve. Whether you need tailored guidance, compliance support, or strategic insights to drive new business, ALPH Legal & Compliance is your trusted partner in navigating FCA regulations with confidence.
Contact our team at ALPH Legal & Compliance now and take control of your compliance future!