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Under the Consumer Duty[1], firms must report annually on what their monitoring found about customer outcomes, and what actions they’ll take as a result.
Good Consumer Duty Board reports provide clear evidence about outcomes – helping to turn governance into real change. Boards can ask better questions, hold people to account, and act quickly to make sure they aren’t causing harm or offering poor value. We’ve seen this lead firms to design better products, communicate more clearly and support their customers better. This means they fix issues sooner, and customers are more likely to get fair value and the help they need.
With the third cycle of Consumer Duty Board reports on the horizon, now is a good moment to pause and reflect on what we’ve learned from year 2.
The good news: the Duty is making a difference. Firms are continuing to mature in how they use data and insights to understand their customers' experiences. Boards are more actively shaping and scrutinising this work.
Still, some areas need more attention to ensure reporting is genuinely outcome‑focused. Here’s where firms have made progress compared to our review of first year board reports[2], and where concentrating effort now will help them prepare for the next round of reporting.
Comparing year 1 and 2 reports - what’s improved
Stronger governance and clearer Board oversight
We've seen a meaningful shift in how governing bodies approach the Duty. Boards now formally review and approve reports, including explicit confirmation that they have considered and signed off actions and their firms are meeting their obligations.
Many firms have also chosen to retain their Consumer Duty Board Champion, after we gave them flexibility to decide for themselves. This reflects a recognition that senior accountability is central to cultural change and embedding the Duty across businesses.
Better action plans and ownership
Firms are increasingly setting out comprehensive action plans, with clear responsibilities, timelines and progress updates. Most reports now identify accountable owners for improvements and track delivery status, so Boards can monitor progress more systematically.
Broader and more insightful data
Compared with year 1, firms are drawing on a wider range of quantitative and qualitative data to demonstrate customer outcomes. This includes trend analysis, root cause assessments and comparisons across customer groups. The best reports explain why metrics matter, how they link to customer experiences, and what actions firms have taken when outcomes fall short.
There is also more evidence of firms improving how they identify and monitor outcomes for vulnerable customers, including through better segmentation.
Where firms need to do more
While the year 2 reports show progress, we still found that the quality and depth of analysis was variable. Firms should focus on the following areas in the year ahead.
Clearly link data to customer outcomes
Some firms presented extensive data without sufficiently explaining how it demonstrated good or poor outcomes. Boards must push for analysis that goes beyond management information (MI) dashboards and provides insights. And firms should draw conclusions, identify emerging risks and be prepared to challenge their own practices where the data suggests that customers may not be getting good outcomes.
Monitor outcomes delivered by third parties
Monitoring of outcomes in distribution chains was often weak, especially where firms rely on intermediaries or outsourcing partners. Firms should act proportionately to take responsibility for the outcomes their products deliver, regardless of who interacts with the customer. This must be reflected in their MI, oversight arrangements and Board scrutiny. We know some firms have struggled to identify a proportionate approach, so we plan to consult on changes to rules and guidance relating to distribution chains this year, as well as publish best practice examples of how firms are monitoring outcomes under the Duty.
Evidence meaningful Board challenge
While most Boards reviewed and approved the reports, many did not adequately document the challenge they had provided. This makes it difficult to see how senior leaders tested the evidence they were given. Boards should ensure their minutes and papers clearly set out the discussions they had, the questions they asked and any follow up actions they requested.
Deepen assessment of consumer understanding and support
Some reports still focused more heavily on products, services and value than on customer understanding and support. But these are core outcomes under the Duty. Firms should be able to evidence how they:
- test communications
- assess consumer comprehension
- respond where consumer behaviours indicate misunderstanding or friction
Our best practice guidance can help firms develop their approaches to improving consumer understanding[3].
Both first and second year reports highlighted strong examples of effective practice across the market, including from smaller firms. This shows that it’s possible for all firms to monitor customer outcomes meaningfully and align their strategies with the Duty.
Looking ahead
The improvements we’ve seen show that firms continue to move in the right direction. We want them to draw on these insights as they approach their 3rd year submissions.
Firms should continue strengthening their outcome monitoring, governance and distribution oversight so that the Duty continues to deliver good outcomes for consumers.
We will continue to support the industry by sharing examples of good and poor practice[2], including providing extra insights to help smaller firms apply the Duty.