Insights ¦ Consumer Duty Board reporting

Key Take Aways

• The FCA’s Consumer Duty rules mandate annual Board reports to demonstrate progress in achieving specified customer outcomes, with the first reports due by 31 July 2024.

• Most firms are treating the Board report as an attestation, requiring senior leaders to verify the quality of processes and controls related to customer outcomes.

• Evidencing outcomes for vulnerable customers remains the greatest challenge, primarily due to limited data availability and inability to integrate diverse data sets effectively.

• Organisations are adopting a principles-based approach, allowing flexibility in report content but risking ambiguity and inconsistent interpretations across sectors.

• Quantitative and qualitative insights reveal difficulties in identifying and understanding vulnerability, compounded by GDPR concerns and constraints around data sharing.

• Firms typically identify only a small proportion (7-13%) of customers as vulnerable, often through bottom-up assessments rather than strategic top-down surveys.

• There is a significant variation in firms’ data sources, with many relying on incomplete or stop-gap data, especially concerning customer behaviour and feedback.

• Many organisations perceive an overabundance of data, leading to inefficiencies and analysis paralysis, highlighting a need for standardised metrics and better data governance.

• Customer feedback, including complaints and informal insights, has been underutilised but holds potential to complement quantitative data in assessing outcomes.

• Disparate data systems and legacy infrastructure hinder effective real-time monitoring and causal analysis, necessitating reimagined data architectures.

• Sector-specific guidance and core metrics could enhance reporting consistency, reduce duplication, and foster a more cohesive approach to consumer outcomes.

• Senior leadership engagement in reviewing customer needs and outcomes is crucial, with firms recognising the positive impact of cultural shift driven by Duty implementation.

Key Statistics

• The first Board reports were due by 31 July 2024 following the FCA’s implementation in July 2023.

• 34% of survey respondents found evidencing outcomes for vulnerable customers extremely challenging.

• 30% reported the availability of appropriate data as extremely challenging.

• Between 7-13% of customers were identified as vulnerable in firms’ assessments, based on bottom-up evaluations.

• 81% of firms considered training and competency data to be fit for purpose.

• 74% of firms believed complaint root cause analysis data was fit for purpose.

• 69% of firms used top-down surveys to understand vulnerability, while most relied on bottom-up approaches for individual customer assessments.

• Over 40% of firms were using stop-gap data or had no data regarding specific areas such as customer behavior or feedback.

• 55% of firms reported integration of data as quite challenging, with some citing difficulties in showing the relationship between data sets.

• 45% of firms acknowledged that the absence of standardised reporting formats hampers efficiency.

• Outcomes driven by the Duty have influenced more senior-level conversations focused on customer well-being, even where business metrics declined.

• The survey involved 144 responses from individuals directly involved in Board reporting, out of a total of 455 responses received.

Key Discussion Points

• The primary challenge in Board reporting is evidencing outcomes for vulnerable customers due to data gaps and integration issues.

• Interpretations of GDPR and concerns over data sharing are barriers to effectively identifying and supporting vulnerable customers.

• Firms are struggling to develop comprehensive vulnerable customer strategies due to limited understanding of vulnerability characteristics.

• There is a need for sector-specific guidance, especially on data retention, consent, and intervention strategies for vulnerability.

• The absence of standardised data and reporting formats leads to inefficiencies and potential over-reporting.

• Many firms have found that the Duty stimulates valuable Board-level conversations about customer outcomes, fostering a culture shift.

• Customer feedback, including non-quantitative insights, remains underused but holds potential for richer outcome measurement.

• Many organisations acknowledge that existing data structures are retrofitted and require reimagining to meet future compliance needs.

• Differing approaches to data collection and reporting across firms point to a sector-wide need for principles, good practice, or core metrics.

• Leaders are increasingly taking an active role in understanding and improving customer outcomes through ongoing review and strategic oversight.

• There is a call for more sector-specific interpretations of the Duty to reduce ambiguity and promote consistent application.

• The debate emphasizes the importance of connecting operational activities, product design, and broader data strategies to deliver real customer benefit.