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The Consumer Duty and annual board reporting

By Krysta Prestney | June 3, 2024

What are the reporting obligations imposed on firms and their boards pursuant to the Consumer Duty?
Financial, Executive and Professional Risks (FINEX)

The Consumer Duty (‘the Duty’) was implemented on 31 July 2023.[1] It sets the standard of care that firms[2]should give to customers in retail financial markets to deliver good outcomes.[3]

Protecting consumers[4] is one of the FCA’s key focus areas for 2024/25.[5]Central to the Duty is embedding the interests of customers in a firm’s culture and purpose “across every firm at every level, with leadership from boards”[6]. In achieving this, the FCA has imposed an annual reporting obligation on firms.

Annual Report

The FCA requires firms to prepare an annual Consumer Duty report for its board (the ‘Report’), or equivalent governing body, (the ‘Board(s)’), with the first report being due by 31st July 2024. The Report should set out the results of the firm’s monitoring of outcomes received by retail customers[7]and any actions required pursuant to that monitoring.  The Report will be a principal way for firms to demonstrate compliance with the Duty.

Boards can expect to come under greater scrutiny in evidencing steps taken to drive good customer outcomes.[8] At least annually, the Board must:

  • review and approve the firm’s Report on outcomes received by retail customers;
  • confirm whether it is satisfied that the firm is complying with its obligations pursuant to the Duty;
  • assess whether the firm’s future business strategy is consistent with its obligations under the Duty.[9]

What the FCA Expects from Firms and Boards

Boards have an obligation to ensure that its firm embeds good customer outcomes. The additional obligations on Boards regarding ongoing monitoring and annual reporting imposed by the Duty, require a Board to agree:

  • action to address identified risk that retail customers may not receive good outcomes;
  • action required to address any identified instance where retail customers have not received good outcomes; and
  • any amendments to the firm’s business strategy to ensure it remains consistent with meeting the firm’s obligations under the Duty.[10]

The FCA appears to have adopted a balanced approach to firms’ implementation of the Duty. Even in circumstances where firms may have made mistakes, the FCA will be pragmatic – it will look favourably on firms which have taken reasonable steps to identify and address concerns [11] making both the monitoring and reporting processes even more important.

Whilst the FCA has said it will be pragmatic in the assessment of a firm’s implementation of the Duty and has not set a prescribed format in which monitoring of the Duty should be recorded, it does expect firms to be able to provide information to the FCA on request.  Firms are expected to maintain records, including where problems have been identified and how they have been addressed and demonstrate how it has delivered good outcomes.  This requires a firm to consistently consider whether it is delivering good outcomes for customers.  It is not sufficient for firms to simply produce an annual report, it should be data-led and backed by tangible evidence of the firm embedding the Duty.

It would be prudent for firms to ensure that Boards have sufficient time to review and provide challenge to the Report and the underlying data ahead of the 31 July 2024 deadline. 

Possible Implications for Boards and Preparation

Board members fall within the scope of the Senior Managers and Certification Regime (SM&CR).  The FCA will hold Senior Managers individually accountable pursuant to the SM&CR[12]where failure to comply with the requirements of the Duty are found.  Accordingly, Board members should be clear about their roles in delivering the Duty. 

Firms may want to review their coverage under their Directors’ and Officers’ (D&O) policy should Board members fall foul of the Duty requirements.  Any claim (which often arises from a written demand alleging a wrongful act and seeking compensation or other redress) against a Board member relating to managerial activities in respect of the Duty, may trigger the D&O policy.  However, with regards to regulatory investigations, often there is no allegation of a wrongful act and firms should look to ensure their coverage allows for this scenario.

D&O policies are claims made policies – the relevant policy will be the one in place at the time a claim is received.  It will be important to consider your policy limit, particularly in circumstances where a claim is made against numerous Board members.  D&O policies are generally subject to an aggregate limit of indemnity which may be eroded by all Board members against whom a claim is made.

The definition of claim, which is usually the trigger for making a notification, is often broader than the receipt of legal proceedings.  It is important for firms to notify the appropriate policy in a timely manner (and certainly before the policy expires) to avoid any issues around late notification.


  1. The Duty was implemented for open products on 31 July 2023 and is due to be implemented for closed products (products which were sold before 31 July 2023 and have not been marketed or sold to new customers since) on 31 July 2024. Return to article
  2. The Duty applies to the regulated activities and ancillary activities of all firms authorised under the Financial Services and Markets Act 2000 (FSMA), the Payment Services Regulations 2017 (PSRs) and E-money Regulations 2011 (EMRs), in respect of products and services for prospective and actual retail customers. Finalised Guidance FG22/5 Final non-Handbook Guidance for Firms section 2.1. For full definition of a firm see the FCA Handbook Glossary Terms. Return to article
  3. PRIN 2.1.1 and Principle 12. Return to article
  4. The FCA “generally use ‘consumer’ when talking about the wider group of those who use financial services.” Finalised Guidance FG22/5 Final non-Handbook Guidance for firms on the Consumer Duty section 1.14. For full definition of a consumer see the FCA Handbook Glossary Terms. Return to article
  5. FCA 2024/2025 Business Plan. Return to article
  6. Sheldon Mills speech to KPMG on 20 February 2024. Return to article
  7. The FCA “generally use…customer when talking about an individual firm’s customers or potential customers”. For the full retail customer scope see Finalised Guidance FG22/5 Final non-Handbook Guidance for Firms on the Consumer Duty section 1.14 and 2.3. For full definition of a retail customer see the FCA Handbook Glossary Terms. Return to article
  8. Sheldon Mills speech to KPMG on 20 February 2024. Return to article
  9. PRIN 2A.8.4. Return to article
  10. PRIN 2A.8.5 and Finalised Guidance FG22/5 Final non-Handbook Guidance for firms on the Consumer Duty section 10.4. Return to article
  11. Nikhil Rathi (FCA Chief Executive) speech delivered at the Morgan Stanley European Financials Conference on 14 March 2024. Return to article
  12. Final non-Handbook Guidance for firms on the Consumer Duty section 10.8A. Return to article

Associate Director - Claims Advocate


GB Head of FINEX Financial Institutions

Global Head of FINEX Financial Institutions
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