Consumer Duty: The Chair’s Role in Oversight

The Chair’s Role in Consumer Duty Oversight: Hiring Implications

Consumer Duty has changed what a Chair needs to bring to a retail-facing regulated firm board. Not incrementally — the change is structural. Under the previous conduct framework, the Chair’s accountability for conduct outcomes was largely mediated through the board’s oversight of management. Under Consumer Duty, the board must annually confirm, in writing, that it has assessed the firm’s delivery of good outcomes for retail clients and is satisfied with what it has found. That confirmation is not a board resolution proposed by management and approved with minimal scrutiny. It is a governance judgment that requires the Chair to have led a process of genuine, evidence-based board assessment.

The hiring implication is direct: the Chair candidate brief at a retail-facing regulated firm must now include a specific assessment of whether the individual has the capability to lead this process effectively. A Chair who lacks the consumer-facing financial services expertise to evaluate management’s Consumer Duty assessment — who cannot read and challenge a fair value analysis, who cannot assess whether a consumer understanding test methodology is credible, who has never governed a business where the FCA’s conduct oversight was substantive rather than procedural — is bringing a gap to the role that will become visible in supervisory interactions and in the quality of the annual board report.

What the FCA Expects the Chair to Do Under Consumer Duty

The FCA’s Consumer Duty Policy Statement PS22/9 is explicit about the board’s role: the annual board report must be reviewed and approved by the board, and it must reflect genuine board oversight of the firm’s Consumer Duty compliance. The FCA expects to see evidence that the board has engaged substantively with the management information underpinning the report — that directors have asked challenging questions, required additional evidence where the initial presentation was insufficient, and been prepared to record their concerns in the report where the evidence revealed gaps in performance.

The Chair’s specific role in this process is to ensure that the board’s collective engagement is genuine rather than nominal. This requires setting an agenda that gives Consumer Duty adequate time and attention, ensuring that the management information presented is disaggregated to a level that allows meaningful scrutiny rather than presented as a high-level summary that precludes challenge, and being willing to require management to return with additional evidence where the board’s initial assessment is that the data does not support the conclusions management has drawn.

The FCA has been clear in its multi-firm reviews that it views a Consumer Duty annual board report that acknowledges no areas of weakness — for any firm of any complexity — as a governance quality indicator of the wrong kind. A Chair who chairs a board that produces such a report is either not exercising genuine oversight or is not creating the governance environment in which directors feel they can raise concerns. Neither reflects well on the Chair’s effectiveness, and both create a supervisory relationship problem.

The Four Outcome Areas: What the Chair Needs to Understand

Each of the four Consumer Duty outcome areas — products and services, price and value, consumer understanding, and consumer support — requires the Chair to bring different dimensions of knowledge to the oversight process. The Chair does not need to be a technical expert in each area, but needs sufficient understanding to assess whether management’s evidence for each outcome is credible and sufficient.

For products and services, the Chair needs to understand the firm’s product portfolio well enough to assess whether the products are designed to meet the needs of the target market, and to identify where legacy products may be delivering outcomes that would not be acceptable if the products were designed today. Chairs who have never led a product oversight process — who are unfamiliar with the concept of target market assessment, distribution strategy review, and product governance committee structure — will struggle to evaluate this section of the annual board report credibly.

For price and value, the Chair needs to understand the analytical methodology underpinning the fair value assessment. This is technically demanding — it requires an assessment of whether the total cost of the product, across all distribution layers, represents genuine value for the outcomes delivered to retail clients. A Chair without financial services product experience may find this assessment opaque without adequate preparation, and preparation alone may not be sufficient if the underlying methodology is genuinely complex.

For consumer understanding, the Chair should be able to assess whether the consumer testing methodology used to evaluate client communications is rigorous — whether the sample is representative, the testing conditions realistic, and the conclusions drawn proportionate to the evidence. And for consumer support, the Chair should be able to read call handling data, complaint root cause analysis, and vulnerable customer outcomes data in a way that enables genuine scrutiny rather than simple acceptance of management’s summary.

What This Means for the Chair Appointment Brief

The practical implication for nomination committees making a Chair appointment at a retail-facing regulated firm is that Consumer Duty literacy must appear in the brief explicitly — not as a desirable quality but as a threshold requirement alongside the FCA’s governance expectations. The brief should specify:

Direct experience of governance oversight of a Consumer Duty-compliant business, ideally at board level but potentially at senior executive level if the individual’s executive career included substantive consumer conduct responsibility. Experience of reviewing and challenging fair value assessments — either as a board member, an executive, or a professional adviser with relevant regulatory expertise. Familiarity with the FCA’s supervisory approach to Consumer Duty — which means having been present at, or having read and engaged with, the FCA’s multi-firm review findings, Dear CEO letters, and supervisory feedback on Consumer Duty quality across the regulated population.

The nomination committee should also assess whether the candidate understands how Consumer Duty has changed the board’s liability exposure. A Chair who does not appreciate that the annual board report is a live regulatory document that the FCA can request and that directly affects the firm’s supervisory risk profile is not adequately informed about the nature of the accountability they are accepting.

The Chair’s Role in Building Board Capability for Consumer Duty

Beyond the Chair’s own expertise, the Chair has a governance responsibility to ensure that the board collectively has adequate Consumer Duty capability. This means considering Consumer Duty competence when assessing the board composition, identifying where gaps exist in the board’s collective ability to oversee the firm’s Consumer Duty performance, and addressing those gaps through NED appointments, board education, or the use of specialist advisers to support the board’s work.

A board of six or seven non-executive directors at a retail-facing regulated firm should include at least one or two members with direct experience of consumer-facing financial services operations — at a level that goes beyond strategic oversight to include genuine familiarity with the day-to-day reality of how retail clients interact with financial products. The Chair is responsible for identifying whether this expertise exists on the current board and for raising the succession planning implications where it does not.

Consumer Duty and Chair Succession Planning

Chair succession planning at retail-facing regulated firms must now explicitly consider Consumer Duty capability as a succession criterion. A firm whose incoming Chair lacks the consumer conduct expertise that the outgoing Chair brought to the role — or whose incoming Chair is being selected primarily on the basis of financial services sector credentials without specific assessment of Consumer Duty capability — is creating a governance gap that the FCA will identify in the transition period.

The nomination committee’s succession planning process should include a specific skills matrix assessment against Consumer Duty competence, and any identified gap should inform both the incoming Chair appointment brief and the board’s NED succession planning. A Chair who arrives without Consumer Duty expertise can develop it — but the development timeline must be realistic, and the board’s Consumer Duty oversight capacity during the transition period must be maintained through the expertise of other directors while the Chair is building familiarity with the specific requirements of the firm’s retail conduct position.

The FCA’s Assessment of Consumer Duty Governance at Chair Level

In supervisory meetings with regulated firm chairs, the FCA’s Consumer Duty questions have become increasingly specific. The regulator no longer asks only whether the firm has a Consumer Duty programme — it asks whether the board is satisfied that the programme is delivering good outcomes, what evidence the board has reviewed to reach that conclusion, and what the Chair’s own assessment is of the areas where further improvement is needed. A Chair who cannot answer these questions with reference to specific evidence from the annual board report assessment process is demonstrating an oversight approach that the FCA regards as inadequate.

Exec Capital advises boards making Chair appointments at retail-facing regulated firms on how to structure the Consumer Duty capability assessment within the overall brief. We assess candidates against their specific Consumer Duty governance experience and advise nomination committees on how to evaluate whether a candidate’s retail conduct background is sufficient for the specific oversight requirements of their firm. Every Chair search at a regulated firm is led personally by Adrian Lawrence FCA on 0203 834 9616.

Consumer Duty and the Chair’s Relationship with the FCA

Consumer Duty has changed the nature of the FCA’s supervisory engagement with regulated firm Chairs in a material way. The regulator’s supervisory meetings with chairs at retail-facing firms now routinely include discussion of the Consumer Duty annual board report — its methodology, its conclusions, and the board’s own assessment of where performance gaps remain. A Chair who arrives at a supervisory meeting unable to speak to the specific content of their firm’s annual board report — who defers entirely to management on questions about the fair value methodology or the consumer support outcome data — is demonstrating a level of board engagement with Consumer Duty that the FCA will regard as inadequate.

This has a direct bearing on the Chair appointment decision. The FCA’s assessment of a proposed SMF9 holder includes an assessment of whether the individual has the regulatory engagement capability to manage the supervisory relationship that the role requires. At a retail-facing firm, that means being able to engage substantively with the FCA on Consumer Duty outcomes — not simply confirming that the board has approved an annual board report, but being able to speak to its content with genuine understanding. Boards should assess their Chair candidates against this specific capability, ideally through a scenario-based discussion that tests their familiarity with Consumer Duty governance rather than simply accepting general financial services governance experience as a proxy.

The incoming Chair at a retail-facing regulated firm should make Consumer Duty oversight a specific agenda item in their first six months — reviewing the most recent annual board report with fresh eyes, meeting with the compliance function and the management Consumer Duty lead to understand the current state of delivery, and assessing what changes to the board’s Consumer Duty oversight process they would recommend. This investment in the early months establishes the Chair’s credibility on Consumer Duty with both the board and the FCA, and provides a foundation for the quality of supervisory engagement that the annual board report process requires.

The Chair’s Role in Vulnerable Customer Governance

Consumer Duty’s requirements in relation to vulnerable customers deserve specific attention in the context of the Chair’s oversight role. The FCA expects regulated firms to identify and respond to customers in vulnerable circumstances — those affected by low financial resilience, low financial capability, life events such as bereavement or relationship breakdown, and health conditions that affect their ability to engage with financial products and services. The board’s oversight of how the firm identifies and supports vulnerable customers is part of the Consumer Duty annual board report assessment and is an area where the FCA has been explicit that it expects genuine governance engagement rather than policy compliance.

The Chair’s specific role is to ensure that the board receives sufficient management information about vulnerable customer outcomes to assess whether the firm’s approach is adequate — and to challenge management where the information suggests that vulnerable customers are receiving worse outcomes than other customer segments. This requires both the governance experience to structure the board’s information requirements and the consumer-facing financial services knowledge to assess whether the management information provided is adequate to the task. Exec Capital specifically assesses Chair candidates at retail-facing regulated firms against their track record in vulnerable customer governance, as part of our Consumer Duty capability evaluation.

Adrian Lawrence

Adrian Lawrence FCA is the founder of Exec Capital. He is a Chartered Accountant and holds an ICAEW practising certificate in his own name with over 25 years’ experience operating at C-suite level, Adrian brings direct executive experience to senior search. His background spans private equity-backed businesses, owner-managed companies, and listed environments, giving Exec Capital a practitioner’s understanding of what leadership hires actually require.