The Financial Conduct Authority published its reflections on firms’ second-year Consumer Duty Board reports, noting that reporting and governance practices have improved but that the quality and depth of outcome-focused analysis remains uneven as firms prepare for the third reporting cycle. The FCA reiterates that firms must report annually on what their monitoring found about customer outcomes and the actions they will take as a result. Compared with year 1, the FCA observed stronger board oversight, with boards more consistently reviewing and approving reports and explicitly signing off actions and compliance with obligations, and many firms retaining a Consumer Duty Board Champion. Reports more often include structured action plans with named owners, timelines and progress tracking, and make broader use of quantitative and qualitative data, including trend and root-cause analysis and comparisons across customer groups, with improved monitoring of outcomes for vulnerable customers. The FCA also identified areas needing further work, including clearer links between data and customer outcomes rather than reliance on management information dashboards, more robust monitoring of outcomes delivered through intermediaries and outsourcing partners, better evidence of meaningful board challenge in minutes and papers, and deeper assessment of consumer understanding and support, including testing communications, assessing comprehension and responding where behaviours suggest misunderstanding or friction. Looking ahead, the FCA plans to consult during 2026 on changes to rules and guidance relating to distribution chains and to publish best practice examples on monitoring outcomes under the Consumer Duty, alongside further examples of good and poor practice and additional insights aimed at helping smaller firms apply the Duty.
Financial Conduct Authority 2026-04-16
Financial Conduct Authority reviews Year 2 Consumer Duty Board reports and plans consultation on distribution chain rules
The Financial Conduct Authority published reflections on firms’ second-year Consumer Duty Board reports, noting improved reporting and governance but uneven outcome-focused analysis as firms prepare for a third cycle. It highlights stronger board oversight, more structured action plans and better use of data, while calling for clearer links between data and customer outcomes, stronger oversight of intermediaries and outsourcing, more evidenced board challenge, and deeper assessment of consumer understanding and support. The FCA plans a 2026 consultation on changes to rules and guidance on distribution chains and will publish further best practice examples on monitoring outcomes.