The FCA has published Outcomes Monitoring: Good Practice and Areas for Improvement, setting out what effective Consumer Duty monitoring looks like and highlighting where some firms are still falling short. The regulator’s latest update includes practical examples of good practice and, notably, proportionate approaches suitable for smaller firms.
Good practice highlighted by the FCA
- Clear data strategies that identify which metrics genuinely evidence customer outcomes, rather than relying on generic MI.
- Regular board‑level scrutiny, with governance forums challenging whether customers are receiving fair value and whether actions taken are effective.
- Testing customer understanding, including structured reviews of communications and post‑interaction testing to confirm customers grasp key information.
- Distribution‑chain oversight, where firms monitor intermediaries’ behaviour and ensure products are sold to the right target market.
- Documented remediation loops, showing how insights lead to product changes, process improvements or customer redress.
Proportionate expectations for smaller firms
The FCA helpfully acknowledges that smaller firms may have simpler business models and fewer products, and therefore can adopt more streamlined, proportionate monitoring frameworks. Examples include using a smaller set of core metrics, lighter‑touch governance structures, and outcome reviews aligned to the scale and complexity of the firm. This clarity is a welcome addition to the FCA’s output, helping smaller firms understand what “good” looks like without over‑engineering their approach.
Areas for improvement
The FCA continues to see weaknesses where firms rely on incomplete MI, cannot link data to real customer outcomes, or treat monitoring as a one‑off exercise. Some firms also struggle to evidence how insights lead to meaningful change.
The regulator reiterates that outcomes monitoring is central to Consumer Duty compliance and will remain a key focus of future supervisory work.
With Consumer Duty Board Reports due this month, this update may land somewhere between “just in time” and “information we could have used earlier.”
Either way, the message is clear; MI alone is not enough. Firms need to clearly show the route from risk or poor outcome to the action taken, and measurable improvement. The strongest reports will explain the insight, the challenge and the action that followed.