Insights ¦ Consumer Duty Board Report

Key Take Aways

1. The annual Consumer Duty Board Report is a comprehensive document designed to demonstrate how firms are embedding and complying with the Duty to deliver improved customer outcomes. It must be tailored to the firm’s specific business model and sector.

2. The report emphasises continuous assessment and challenge by senior management, with the Board required to scrutinise outcomes, risks, and strategic alignment at least annually. Effective challenge is critical to demonstrate genuine embedding.

3. It highlights the importance of qualitative and quantitative management information (MI), case studies, and evidence-based insights to support robust monitoring across all four Consumer Duty outcomes.

4. The role of the Consumer Duty Board Champion is vital for providing independent challenge, focusing on embedding efforts, and engaging with the FCA’s key questions to assess progress.

5. A core part of the report involves evaluating outcomes related to Products and Services, Price and Value, Consumer Understanding, and Consumer Support, with detailed RAG-rated metrics and root cause analysis.

6. The report underlines the necessity for firms to regularly review product governance, target market alignment, and fair value assessments to ensure ongoing compliance and customer benefit.

7. Culture and purpose are central themes; firms should demonstrate how their values and staff behaviours are aligned with delivering good customer outcomes, including through training and incentive structures.

8. The second line of defence and compliance function should conduct rigorous assurance, including outcome ratings, escalation points, and audit activity, with clear documentation of remedial actions taken.

9. Governance amendments, including Board scrutiny, committee responsibilities, and Senior Management Function (SMF) role clarity, are emphasised as critical in maintaining oversight of the Duty.

10. The report advocates for ongoing future enhancements—particularly in MI, customer segmentation, vulnerable customer strategies, and process automation—to support continuous improvement.

11. FCA engagement and regulatory interactions, including inspections, survey data, and proactive communication, should be summarised to demonstrate proactive compliance efforts.

12. Final Board approval must include a detailed challenge trail, documentation of strategic alignment, and agreement on actions for addressing risks and improving outcomes, reinforcing the Board’s active oversight role.

Key Statistics

• No specific quantitative statistics are explicitly mentioned within the article; however, the report structure involves monitoring metrics, MI, and outcome ratings supported by qualitative evidence.

• The report encompasses six main sections, including detailed appendices and case studies, aimed at offering a comprehensive view of outcome monitoring.

• The Duty requires at least annual Board review and approval, integrating outcome assessments, strategic alignment, and risk mitigation.

• The monitoring outcomes are rated by RAG status (Red, Amber, Green), with specific processes for escalation and remedial action, although exact figures are not provided.

Key Discussion Points

• The significance of ongoing senior management challenge and independent oversight in embedding Consumer Duty effectively across a firm.

• The necessity of integrating outcome monitoring into strategic decision-making, with focus on data quality, gaps, and root cause analysis.

• How the firm’s culture and purpose are aligned to the Duty, particularly through staff training, incentives, and leadership commitment.

• The role of the Board Champion in providing qualitative insight, challenging management, and ensuring continuous focus on customer outcomes.

• The importance of detailed MI, case studies, and qualitative evidence to support outcome ratings and identify areas for improvement.

• The need for a holistic assessment across all four outcomes, with specific attention to vulnerable customers and groups at risk of worse outcomes.

• Effective governance frameworks, committee responsibilities, and SMF roles as enablers of ongoing compliance and oversight.

• How future enhancements, including process automation and more sophisticated MI, can support continuous evolution of outcome monitoring.

• The relevance of FCA engagement, including inspections and formal communications, as indicators of the firm’s proactive compliance posture.

• The emphasis on challenge from the Board, with clear documentation and minutes, to demonstrate genuine governance and oversight.

• The benefits of case studies and examples of good practice in reinforcing learning and sharing insights across the organisation.

• The overarching strategic imperative that compliance under the Consumer Duty should be viewed as a journey of ongoing improvement rather than a one-off activity.

Document Description

This article presents a detailed overview of the Square 4 Consumer Duty Board Report template, capturing the core requirements for annual firms’ reporting on customer outcomes under the FCA’s Consumer Duty framework. It underscores the importance of embedding ongoing monitoring, challenge, and strategic oversight by senior management and the Board. The report covers outcome assessments across four key areas—Products and Services, Price and Value, Consumer Understanding, and Consumer Support—supported by MI, case studies, and governance demonstrations. Emphasising continuous improvement, the article outlines expectations for Board challenge, governance enhancements, and future-proofing reporting processes. It serves as a practical guide for firms seeking to demonstrate compliance, manage risks, and foster a customer-centric culture aligned with FCA expectations.