Consumer Duty Board Reports – What the FCA Expect

The second iteration of Consumer Duty Board Reports are expected to be completed before the end of this month which provides us at RB Compliance an opportunity to share our experience and understanding of this subject.

What has the FCA said about Board Reports?

The FCA has been fairly critical of many of the reports they have seen over the past year, citing the following issues from several multi-firm reviews:

1. Reports have been focused on whether the firm is complying with processes (completing product approvals, value assessments, communication testing, etc.) rather than on the outcomes received by customers

2. Too often reports painted an overly positive picture of the outcomes received by customers, simply providing high-level statements claiming that good value is provided, the product functions well, etc. Instead, the report should genuinely challenge the outcomes provided to customers, aiming to drive improvement

3. Reports did not include a review of a firm’s business strategy or culture

4. Information in the report should enable senior managers to discuss the issues identified, challenge validity and drive improvement.

Further information can be found in our previous article: FCA Consumer Duty Board Report 

Download your template Consumer Duty Board Report

What should be in Board Reports?

Reports should be focused around the results of the firm’s outcomes monitoring, essentially summarising whether customers are receiving good outcomes and, where outcomes could be improved, relevant information is included which enables the Board to discuss, challenge and decide / agree actions to improve the performance of the product.

To achieve this, the report should reflect the ‘group’ approach required as part of the firm’s outcomes monitoring. This includes dividing the target market for each product and service into sub-groups based on the characteristics of customers, ensuring groups of vulnerable customers are also included. Following this the firm must consider ‘what good looks like’ for each group of customers. This fundamental thinking should be reviewed and agreed or challenged by the Board and is essential to the next step, identifying the data which tells you whether ‘good’ is happening. This data may include:

• Complaints

• Customer feedback

• Business persistence data (renewal, cancellation, switching to a different product, claims data, default or arrears)

• Second line monitoring results

• Customer journey reviews

• IT data such as use of systems

The reports as described are part of the firm’s outcomes monitoring, with the highlights included in the Board Report by way of dashboard reporting, supplemented by analysis, explanations, cross-reference to regulatory concerns in your sector and any actions taken to resolve the problem. The FCA then expect that senior managers have discussed the actions to decide whether they are adequate enough to remedy the issue.

Following the review it is best for the Board to assess both the firm’s culture and business strategy, identifying whether either are negatively impacting on customer outcomes.

All of the above, specifically the steps to complete the report and the data which needs to be escalated, should be set out in business policies and procedures – a point made by the FCA in their reviews.

If you’re looking for a ready-made design, see our new Consumer Duty Board Report Template which encompasses all of the FCA’s feedback, with sections to complete enabling a group approach to your report. The template includes guidance helping you each step of the way.

You can get your copy here: Board Report Template