Consumer Duty Review and Board Report

The annual Board report is important for a number of reasons.

Firstly, it is of course a formal regulatory requirement, and one the FCA has placed a great deal of emphasis on (see their “good and poor practice” guidance issued in December 2024), reflective of the fact that consumer duty shouldn’t be seen by firms as a “one and done” initiative – it should permeate through the firm’s business  model on an ongoing basis.

Secondly, and on a related note, the annual report will help senior management to verify the firm has taken and continues to take the right actions in respect of consumer duty, thereby giving them comfort that their business has the genuine focus on customer outcomes that the FCA expects to see.

Finally, and arguably most importantly given the drivers behind the consumer duty, it presents an opportunity for the firm to identify areas where it needs to make further improvements in order to ensure it can continue to deliver the right outcomes for its customers.

Given the above, the process of producing and considering the annual report on Consumer Duty cannot be seen as simply a “box-ticking” exercise. It requires genuine focus and a clear plan, buy in and engagement from senior management and a well thought out structure and methodology. And it is worth remembering that although there is no general requirement to submit the report to the FCA (consumer duty did not introduce any new reporting requirements for firms), the FCA has the right to ask for a copy of the report at any time, together with the management information and analysis that sits behind it.

The areas of focus for the report should include:

• Strategy and how this is both influenced by and helps facilitate the deliver of good outcomes for retail customers;
• What measures the firm has taken to ensure it is delivering against the four outcomes under consumer duty (product design, customer information needs, servicing and fair value), with analysis and MI to back this up;
• How the firm has embedded consumer duty into its culture, from the top down;
• Areas for future enhancement, with clear recommendations and a roadmap.

The report should be prepared by someone with sufficient seniority and experience to ensure it is comprehensive and also carries adequate “weight”. There is no requirement for the report to be produced by an external party, but many firms may feel this is a good way to ensure that it focuses on the right areas, is genuinely independent and also take account of industry “best practice”.

Finnovation can help in this respect. Our team of compliance specialists have extensive experience of supporting firms in the implementation of consumer duty and can bring their knowledge of bothy FCA expectations and industry best practice to bear in helping you to produce a consumer duty Board report that not only meets your obligations but also adds genuine business value.