Writing your Consumer Duty Board Report

The Consumer Duty, introduced by the Financial Conduct Authority (FCA), aims to set higher and clearer standards of consumer protection across financial services, mandating firms to put their customers' needs first through the creation of a product governance framework involving product approvals, product reviews, value assessments and outcomes monitoring during all of which, firms apply the cross-cutting rules and final two outcomes. The final step is to report to the governing body to enable them to ascertain whether the organisation is compliant with the duty. 

Writing a board report under the Consumer Duty can seem like a daunting task, but it is an essential component for ensuring compliance and fostering a consumer-centric approach within your organisation, and of course, compliance with PRIN 2A.8. 

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In this article, we will break down the key elements of a board report under the duty, providing a structured approach to help you effectively communicate your firm's compliance status, strategic priorities, and operational adjustments. We will cover the core components that should be included, such as an overview of regulatory requirements, an assessment of current practices, a summary of consumer outcomes, culture and recommendations for continuous improvement. This article is supported by our board report template which is available on the Consumer Duty resources section of our website. 

Regulatory Requirements

PRIN 2A.8 focuses on the governance, culture, and oversight responsibilities of firms in the context of the Consumer Duty, with PRIN 2A.8.3-5 setting out the requirements in relation to the governing body report, otherwise known as the Board Report. 

These sections are fairly high level, the key takeaways being:

1. A report must be produced at least on an annual basis

2. The report must set out the results of the firm’s outcomes monitoring 

3. It should be designed to give senior managers the opportunity to review the outcomes received by customers and confirm whether they are satisfied the firm is complying with the duty

4. When reviewing the report, the governing body must assess whether the firm’s business strategy is aligned with the duty and producing good outcomes

5. Remedial action needed to improve customer outcomes or address deficiencies must be agreed as part of this review. 

Current Practices

The main body of your report can be an assessment of current practices, almost a mini-audit report. This approach will allow the Board to get a real feeling of the status of the duty within the firm, being able to see technical areas of non-compliance, such as failing to undertake product approvals, through to issues/trends identified in outcomes monitoring. An extract from our board report template is below to highlight just some of the points to cover:

Consumer Outcomes 

In order to summarise the consumer outcomes succinctly we have embedded this within each section of the main body of the report, therefore when a firm reviews their approach to each of the four outcomes, they are looking at the outcomes actually received by customers, not just their technical compliance with the duty. This is achieved through data points such as:

Does the outcomes monitoring testing use a range of data, including:

1. Customer use

2. Cancellation 

3. Switching 

4. Default/Arrears (if appropriate) 

5. Customer feedback

6. Complaints 

7. Vulnerable customer reviews 

And has the testing of value included groups of customers with different characteristics/customers who bought using different distribution channels to identify if groups of customers receive different value?

Improvement 

Each finding should have a space to record actions already taken to improve customer outcomes and/or compliance with the duty, these of course can be summarised in earlier sections. We took the approach of including a specific findings section at the beginning of the report together with an executive summary. 

Culture 

Possibly the most important element of the report is a review of the organisation’s culture, we envisage this to provoke the most important discussions by the Board. As a result, we house ours at the beginning. 

A statement by the consumer duty champion, outlining their view of the outcomes that customers receive and the level to which the duty has been embedded within the firm is a great starting point. We include a short list of suggested topics the champion can write about. 

The culture section should then get the Board to reflect on whether the duty has been defined properly, for example is there an understanding of how the duty works across multiple firms within the same group and/or a definition of ‘good outcomes’ which has been successfully cascaded throughout the company?

This section can then review the businesses values, goals and ultimately, its business plan or strategy to check if they are aligned with the duty – findings from the main body of the report will inform this decision. 

Leadership, People and Governance can also be included to review the actions the leadership team have taken to promote the duty, its intended outcomes and benefits to the organisation through people management and governance structures.

By following these guidelines, your board report will not only meet regulatory expectations but will also drive meaningful discussions and decisions that enhance consumer outcomes and align with the overarching principles of the Consumer Duty.

Our full range of Consumer Duty compliance resources – including webinars and downloadable content such as our template Board Report – are available to browse and buy here: Consumer Duty Compliance Resources | RB Compliance Consultancy