Year 2 Consumer Duty Board Reports: Progress and What Comes Next

Why It Matters

Stronger board oversight and outcome‑focused reporting reduce consumer harm and lower regulatory risk, making the Duty a competitive differentiator for firms that embed it effectively.

Key Takeaways

• Year‑2 reports show stronger board oversight and formal sign‑off
• Action plans now include owners, timelines, and progress tracking
• Firms use broader quantitative and qualitative data to assess outcomes
• Gaps persist in linking data to outcomes and third‑party monitoring
• FCA will consult on distribution‑chain rules before year‑3 submissions

Pulse Analysis

The Financial Conduct Authority’s Consumer Duty obliges firms to demonstrate that their products and services deliver fair value and clear outcomes for customers. In its second‑year board reporting round, the FCA observed a noticeable shift toward formalized governance: boards are now required to sign off reports, confirm action‑plan ownership, and retain a Consumer Duty champion. This heightened accountability encourages firms to move beyond surface‑level metrics, leveraging richer data sets that capture both quantitative performance and qualitative customer sentiment, especially for vulnerable segments.

While progress is evident, the FCA’s analysis highlights persistent blind spots. Many firms present extensive dashboards without translating numbers into actionable insights, leaving boards with limited visibility into emerging risks. Oversight of third‑party distributors remains uneven, raising concerns that outsourced channels could dilute consumer protections. Moreover, board minutes often lack documented challenge, making it difficult to assess whether senior leaders are rigorously testing the evidence. Addressing these deficiencies is critical; firms that fail to close the gap risk regulatory sanctions and reputational damage.

Looking forward, the FCA plans to issue targeted consultation on distribution‑chain expectations and to publish best‑practice examples ahead of the third reporting cycle. Firms should prioritize linking data directly to outcome metrics, strengthening oversight of intermediaries, and embedding a culture of constructive board challenge. By doing so, they not only comply with regulatory mandates but also enhance customer trust, differentiate their brand, and mitigate long‑term financial risk.