Insurance multi-firm review of outcomes monitoring under the Consumer Duty

Multi-firm reviews Published: 26/06/2024 Last updated: 26/06/2024

Firms must regularly monitor the outcomes retail customers receive to identify whether they are meeting their obligations under the Consumer Duty. 


Under the Consumer Duty (the Duty) firms must regularly assess, test, understand and evidence the outcomes their customers are receiving. Without this, it will be impossible for firms to know that they are meeting the requirements set out in the Duty.

This publication sets out the key findings from our review of larger insurance firms’ approaches to outcomes monitoring under the Duty. 
We recognise this represents a new expectation of firms and have set out examples of good and poor practice to help all firms raise their standards where necessary.

Firms that identify gaps in their compliance with our rules should act immediately, putting robust plans in place to address any shortcomings. 

What we did

In December 2023 we requested the most recent board and/or committee reporting from 20 larger insurance firms. These included general insurers, life insurers, insurance intermediaries and regulated third-party outsourcers which service insurers. 

We asked firms to show how they monitor, assess, and test the outcomes customers are receiving, along with actions firms had taken after identifying poor outcomes.  

We assessed the submissions against the monitoring requirements set out in PRIN 2A.9, as well as the guidance given to firms in Chapter 11 of FG22/5: Final non-Handbook Guidance for firms on the Consumer Duty.

We used our assessments, along with our existing supervisory knowledge of firms, to:

  • determine themes in firm approaches
  • identify the good practices firms have employed to be consistent with the Duty 
  • assess whether there are areas of improvement needed 

The review was focussed on outcomes monitoring only and did not include any assessment of underlying processes (such as value assessments) or consider whether firms were meeting the other requirements of the Duty.

We conducted this review of larger firms to test the implementation of these new requirements and to share findings. There are proportionality rules in place, and we expect smaller firms may take a different approach, applying a commensurate level of resource and with simpler governance/processes. But all firms have a Duty to act to deliver good outcomes for their customers. For further information on proportionality and other topics that firms ask us about, refer to Consumer Duty – information for firms

What we found

We saw a wide variety in the quality of responses by firms, including a number of good and poor practices, which are set out below. Some showed good progress in developing a clear and comprehensive firm-wide approach to monitoring customer outcomes. In some cases, this included a clear demonstration of the following causal chain:

Clearly defined customer outcomes A suite of metrics chosen to monitor those outcomes Identification of poor or potentially poor outcomes Investigation and, where needed, actions taken Evaluation of customer outcomes using targeted metrics

However, many firms need to make improvements in their monitoring to enable them to determine whether they are delivering good outcomes for retail customers, as required by the Duty. For example: 

  • Some approaches were overly focused on processes being completed rather than on outcomes delivered.
  • Some board or committee reporting contained limited insight into actual customer outcomes. This was often because of:
    • metrics/data not being comprehensive enough  
    • data which lacked analysis and explanation  
    • thresholds/standards in place which did not appear to be appropriately set and/or communicated.   
  • Few firms were able to provide clear evidence of where the monitoring of outcomes had directly led to proactive action being taken to improve these outcomes, where necessary. 

While inadequate monitoring itself would not necessarily result in poor customer outcomes, monitoring is essential for firms to identify and remediate them.

Detailed findings and good/poor practice

This section sets out a series of good practice and poor practice behaviours we observed during our review. These are intended to give practical help to firms in complying with existing rules and guidance. 

  • A ‘good practice’ is behaviour that we consider is likely to meet our expectations for compliance with the standards in PRIN 2A.9. We would expect any firm properly taking into account the purpose of PRIN 2A.9 to recognise these behaviours as likely to meet our expectations for compliance. However, we are aware that there are likely to be other equally effective ways of demonstrating compliance with these standards. 
  • A ‘poor practice’ is behaviour that we consider is unlikely to meet our expectations for compliance with the standards in PRIN 2A.9. We would expect any firm properly taking into account the purpose of those rules to recognise these behaviours as unlikely to meet our expectations for compliance. 

The design of monitoring approaches

The outcomes firms are seeking will depend on the strategy of the business, type of products and services offered and target markets. Where firms were aiming for clearly defined and specific outcomes, they were better able to determine meaningful metrics and data to monitor them. 

Some firms reported metrics which showed whether a process had been completed rather than providing insight into customer outcomes delivered. This included firms often reporting whether there were overdue value assessments or product reviews. Such metrics were often reported with limited or no insight into key findings of the process, or any learnings or actions to be taken.

While it is important for firms to demonstrate key processes have been completed, in most cases these alone are unlikely to indicate whether good customer outcomes are being achieved. For example, reporting a low number of outstanding value assessments does not alone provide insight into whether customers are receiving fair value. 

The approaches taken by firms to monitor customer outcomes were at various stages of completion. Most required some data improvements to form comprehensive approaches. Some firms detailed where there are data gaps and where they have plans in place to enhance either the data or the monitoring approach. However, some monitoring approaches lacked coherence, or were only in the early stages of development. 

Types of data

Firms need to use their judgement to identify relevant sources of data to give them the insights they need to assess whether they are delivering good outcomes for customers.

Some firms were able to demonstrate clear thinking about the categories of data they required, such as: service level agreement (SLA) compliance, product performance data, second- and third-line reviews, customer feedback, internal quality assurance, complaints analysis, process completion, product governance findings, employee surveys and deep dive analysis. Firms that had demonstrated such thinking were able to provide more meaningful and comprehensive insights on customer outcomes. 

We came across other firms who did not appear to be collecting sufficient data to effectively monitor the outcomes received by retail customers. We recognise that firms may not yet have available the full suite of data they require to monitor customer outcomes as comprehensively as they would like. However, we expect firms to clearly assess what data they require, considering their size, client base, and the types of products or services they offer.

Throughout FG22/5 we provide firms with examples of the types of data they can use to monitor whether they are meeting the expectations under each outcome, and under the Duty as a whole. Although these examples apply to firms across a wide range of sectors, most could be considered relevant to insurers/brokers.

Interpretation and scrutiny

A key purpose of outcome monitoring MI is its ability to facilitate a) the understanding of how products and business processes are working for customers in practice, and b) scrutiny and challenge. We would expect this oversight (including reporting) to take place in a way that allows:

  • senior management within the firm and boards to oversee retail customer outcomes and for action to be taken where required; and
  • boards to challenge management on the outcomes being delivered and the approach to monitoring taken.

This will not be possible without clear presentation and explanation of data. In this review, firms with clearer reporting were more able to demonstrate actions being taken as a direct result of monitoring.

For some firms we were provided with board/committee reporting that contained a lot of data and metrics, but without explanation of what they were telling the reader, and with no recommendations or suggestion of potential associated actions even where poor outcomes were highlighted. 

Monitoring different groups of customers, including customers with characteristics of vulnerability

The Duty requires firms to identify whether any group of retail customers is experiencing different outcomes compared to another group of retail customers of the same product, and to understand why. 

We did not consistently see firms demonstrating monitoring of the outcomes experienced by distinct groups of customers. We would expect monitoring to identify whether distinct groups of customers, such as customers with characteristics of vulnerability, get worse outcomes than other customers for the same product. Where we did see firms conducting monitoring of different groups of customers (such as firms which considered value for customers with different tenures, different age groups, different residency statuses), we saw evidence of different outcomes being received and consequently further analysis or action taken. 

Examples of how insufficient monitoring of outcomes for distinct groups of customers can lead to harm include: 

For customers with characteristics of vulnerability, we have previously issued Guidance (FG21/1: Guidance for firms on the fair treatment of vulnerable customers) that sets out the FCA’s expectations, including that firms should:

  • monitor and assess whether they are meeting and responding to the needs of customers with characteristics of vulnerability and make improvements where this is not happening
  • produce and regularly review management information, appropriate to the nature of their business on the outcomes they are delivering for vulnerable customers
  • be able to provide us with the information they are using to monitor whether they are achieving outcomes for customers with characteristics of vulnerability that are as good as those for other customers

We therefore expected to find that firms already had good insights into outcomes for these customers ahead of the implementation of the Duty, but we did not consistently see evidence of this during our review.

Actions taken by firms to address poor outcomes

We asked for evidence of actions taken following the identification of poor outcomes. We expect firms to be able to monitor the outcomes provided, identify where customers or groups of customers are not getting good outcomes, understand why, and take appropriate action to address the situation.

Most firms could point to some form of process improvements made, such as amending sales documents or changing a claims process. However, some firms did not provide any examples of actions taken as a direct response to poor outcomes identified through monitoring or provided actions which did not show how an improvement to customer outcomes had been delivered. 

Detailed findings – the four Consumer Duty outcomes

We assessed firm approaches for monitoring against the 4 Duty outcomes. For most of the firms in this review, and across all four outcomes, the monitoring MI should be strengthened to ensure it is outcomes, rather than process-driven, and comprehensive enough to provide the relevant board or committee a reasonable view of whether the requirements of the Duty were being met.

Products and services

Monitoring must enable a firm to determine whether retail customers are being, or have been, sold products that have been designed to meet their needs, characteristics, and objectives. 

The data we saw in this review was sometimes sparse, with board or committee reporting often focusing on little more than number and timeliness of product reviews completed, rather than the actual findings of such reviews. These reviews are a key control and provide operational insights for firms, but we rarely saw any insights provided into customer outcomes, or evidence of actions being taken by firms because of these reviews. 

Price and value

Monitoring must enable a firm to determine whether the products that retail customers purchase provide fair value, and that appropriate action has been taken to address products identified as not doing so.

We expect firms to be able to demonstrate that all key elements which have an impact on the overall price and value of the product or service are being monitored. 

Here again, in this review we sometimes saw sparse reporting of monitoring, with board or committee reporting focusing on little more than number and timeliness of value assessments being completed. In the reporting provided for this outcome we noted that certain product performance data, such as loss ratios or profitability was sometimes missing from reporting to boards or committees. Some firms also made little or no mention of certain other aspects which determine the price a customer receives, such as commission or charges, or the operational costs in running the product, or key aspects of value, such as the use of overall product benefits. Firms will need to consider the data they require to monitor effectively under this heading; insurers, insurance intermediaries and outsourced service providers will need to consider this in relation to their insurance products.

Where we did see a wider suite of MI being used to assess this outcome, it sometimes lacked granularity; we did not see evidence of whether value is achieved for different customer types: for example, different age ranges or for customers with characteristics of vulnerability.

Consumer understanding

Monitoring must enable a firm to determine whether retail customers are equipped with the right information to make effective, timely and properly informed decision.

We consistently saw evidence that firms were reviewing existing communications to assess whether they met the requirements of the Duty. We saw some firms that had gone to considerable efforts to redesign their ‘communication review’ processes to assist with ensuring the consumer understanding outcome was delivered. 

However, although most firms have clearly been taking action, it was less clear how many firms were monitoring that their communications support good customer outcomes. Only a few firms were able to show clear monitoring of whether retail customers are equipped with the right information to make effective, timely and properly informed decisions. 

Consumer support

Monitoring must enable a firm to determine whether retail customers receive the support they need.

Firms could strengthen how they monitor under this heading and take actions where appropriate. All firms had some form of customer service targets or service level agreements (SLAs) in place to assist monitoring. For some firms we could not clearly see how these targets or SLAs were determined, and, in some instances, these were unlikely to meet reasonable customer expectations for key journeys. We continue to see substandard service levels across insurance sectors and therefore encourage firms to ensure the customer support targets and SLAs they aspire to are appropriate to ensure their customers are supported. 

Firms will need to ensure they have sufficient information – including MI of appropriate granularity – in order to monitor under this heading. Although we recognise that the various board or committee papers submitted to us were unlikely to contain the full data sets held, we often could not see how firms identified and prioritised which actions to take. 

Next steps

All insurers, insurance intermediaries and outsourced service providers operating within the insurance sector should consider these findings, including the good and poor practice observations. Retail financial services firms in other sectors may also find these observations useful. 

The findings should be used when firms are considering approaches to monitoring outcomes on closed products, as required from 31 July 2024. Firms can also use these findings to support them in the development of their first Consumer Duty annual report, due by 31 July 2024. 

All firms participating in the review will receive individual feedback. Where appropriate, we will also consider use of supervisory tools to make sure that progress is made to meet the requirements of the Duty.

Firms that identify gaps in their compliance with our rules should act immediately, putting robust plans in place to address any shortcomings. 

Interaction with PROD 4

The existing PROD 4 rules, where implemented correctly, will mean firms subject to those rules will already be meeting the requirements of the Duty’s products and services outcome and the price and value outcome for the product and services covered by PROD 4.

PROD 4 contains its own monitoring requirements. However, the monitoring requirements under both the Duty and PROD 4 are broadly the same in relation to the products and services and price and value outcomes. Therefore, as set out in PRIN 2A.9.7 G: where a firm is subject to PROD 4, it may use any monitoring or reviews it carries out under PROD 4 in complying with its monitoring obligations under PRIN 2A.9

Governing bodies

There are points in this publication where we refer to ‘boards’ and ‘committees’ interchangeably or collectively. This is to reflect that the nature of outcome monitoring and reporting may vary between firms in this respect. We do not expect all this information to be the same; where it goes to different boards or committees, it should be the right information to help those bodies fulfil their proper corporate function.

We received a range of papers which demonstrated elements of monitoring outcomes, including those from boards, risk committees, customer or conduct committees, and Consumer Duty working groups. These were generally papers from Q4 2023. In these findings, we refer to examples of reporting, as found in these board/committee reports. Reference to examples of reporting to the board/committees should therefore be read in this context. However, it is for individual firms to determine the nature and manner of oversight that is appropriate in the context of their business.