The Financial Conduct Authority (FCA) has published a speech by Jonathan Pearson outlining progress made in the second year of Consumer Duty Board reporting, alongside clear expectations for what firms must improve ahead of the next reporting cycle.
The overall message is positive, with firms making meaningful progress. However, the FCA notes that progress is inconsistent and further efforts are required to ensure reports lead to better consumer outcomes.
A Shift from Governance to Real Outcomes
Consumer Duty Board reports are designed to move beyond compliance formality and act as a tool for real change. According to Pearson, the strongest reports now provide clear evidence of customer outcomes, enabling Boards to challenge effectively, act quickly, and prevent harm.
This shift is already having an impact. Firms are:
- Designing more suitable products
- Communicating more clearly with customers
- Identifying and fixing issues earlier
As a result, customers are receiving fair value and appropriate support.
Where Firms Have Improved
Stronger Governance and Oversight
Boards are taking a more active role by formally reviewing and approving reports and confirming that Consumer Duty obligations are met. Many firms have also appointed a Consumer Duty Board Champion to strengthen senior accountability.
More Structured Action Plans
Firms are better translating insights into action. Reports now increasingly include:
- Clear ownership of actions
- Defined timelines
- Progress tracking
This enables Boards to monitor progress more effectively and hold teams accountable.
Better Use of Data
Firms have notably improved their use of data. Reports now incorporate a wider range of quantitative and qualitative insights, including:
- Trend analysis
- Root cause assessments
- Customer segmentation
Firms are also improving their ability to identify and monitor outcomes for vulnerable customers.
Where the FCA Wants to See More Progress
Despite progress, the FCA has identified several areas where firms must improve.
Connecting Data to Real Outcomes
Some firms continue to present large amounts of data without clearly explaining its implications for customers. The FCA expects Boards to require deeper analysis, focusing on insight, challenge, and action rather than just dashboards.
Third-Party Oversight
Monitoring outcomes across distribution chains remains weak, particularly where firms rely on intermediaries or outsourced partners. The FCA has signalled further consultation and guidance in this area.
Demonstrating Board Challenge
While most Boards are engaged, many do not sufficiently document how they challenge management. Maintaining clear records of discussions, questions, and follow-up actions is essential.
Consumer Understanding and Support
Reports often focus more on products and value than on whether customers understand those products or receive adequate support. Firms are expected to demonstrate:
- Testing of communications
- Assessment of customer comprehension
- Action taken when confusion or friction is identified
Looking Ahead to Year 3
The FCA’s message is clear: firms are progressing, but greater maturity is expected in the next round of Consumer Duty Board reports.
Future focus areas include:
- Strengthening outcome monitoring
- Enhancing governance and Board engagement
- Improving oversight of distribution chains
The FCA also confirmed it will continue to support firms by sharing examples of good and poor practice, with additional guidance expected, particularly for smaller firms.
How Neopay Can Help
With expectations increasing for Year 3, firms must ensure their Consumer Duty reporting is clear, outcome-focused, and defensible.
Neopay supports firms by:
- Strengthening Board reports and management information, ensuring data is clearly linked to customer outcomes
- Conducting independent audits to provide robust challenge and regulatory assurance
- Training Boards and senior management to demonstrate effective challenge and accountability
By moving beyond “tick-box” reporting, firms can meet FCA expectations and deliver measurable improvements in customer outcomes.
Get in touch with Neopay today to learn how we can support your Consumer Duty journey ahead of Year 3 reporting.
For more information on the Consumer Duty, explore our dedicated Duty section here.
