Consumer Duty Annual Board Report Guide

The Consumer Duty annual board report is the one point in the year when a firm’s board has to put its name to a view on whether retail customers are getting good outcomes. It is not a compliance memo that the board notes and files. Under the FCA’s rules, the board (or equivalent governing body) must review and approve the report, confirm whether the firm is complying with the Duty, consider whether its future business strategy is consistent with the Duty, and agree the actions needed to fix what is not working. The FCA does not require firms to send the report in, but it can ask for it at any time, and it has now reviewed two full cycles of reports and published what it found.

This guide covers what the report must contain, who owns it, what happened to the board champion, how outcomes monitoring feeds the report, the failings the FCA keeps finding, and what the FCA’s 2025–26 review of the Duty means for boards. It finishes with the question most guides skip: what a board needs in its senior team and around the table to produce a report it can actually stand behind.

The rule: PRIN 2A.8 and the annual assessment

The Consumer Duty sits in PRIN 2A of the FCA Handbook. The governance requirement is in PRIN 2A.8: a firm must prepare a report for its governing body setting out the results of the outcomes monitoring it carries out under PRIN 2A.9, together with any actions it has taken or needs to take. At least once a year, the governing body must review and approve that report. In doing so it must confirm whether the firm is complying with the Duty, assess whether the firm’s future business strategy is consistent with it, and agree the actions required.

The timetable is now well established. The Duty came into force for open products and services on 31 July 2023 and for closed products and services on 31 July 2024. The first annual board report for firms with open and closed books was due by 31 July 2024. Most firms have kept July as their reporting point since, although the rule is “at least annually” rather than a fixed date. The FCA’s Consumer Duty information for firms page confirms these dates and confirms that firms do not need to submit the report, but must be able to provide it on request.

There is no prescribed template. The FCA has been consistent that the examples it publishes are illustrations, not a required structure. What it does expect is that the report covers the four outcomes — products and services, price and value, consumer understanding and consumer support — and the cross-cutting obligations to act in good faith, avoid foreseeable harm, and enable and support customers to pursue their financial objectives.

What the assessment should cover

Drawing on the FCA’s own description of the assessment, a report that meets the rule will normally set out:

• Whether products and services are delivering the outcomes expected for their target markets, product by product or at a sensible level of grouping.
• Evidence of poor outcomes, including whether particular groups of customers — for example those with characteristics of vulnerability — are getting worse outcomes than others.
• Impact and root cause for each poor outcome identified, rather than a list of symptoms.
• Actions taken and still needed, with owners, timescales and evidence of whether earlier actions worked.
• Strategy — how the firm’s plans for the coming period support good outcomes, which is the part boards most often leave thin.

Closed books belong in the report too. Since 31 July 2024 the Duty has applied to products that are no longer sold but still have customers. In its first review, the FCA highlighted firms that gave their boards an overview of closed-book reviews and, in one case, sought board approval for remediation funding following an internal audit. Legacy products are where fair value problems tend to sit, so a report that is silent on them invites the obvious question.

Who owns the report

Ownership of the report splits three ways, and confusion between them is behind many weak reports.

The governing body owns the conclusion. The board approves the report and makes the compliance confirmation. That responsibility cannot be passed to a committee or to the compliance function, although a board can ask a risk or customer committee to do the detailed review first. Where a firm has no board, the equivalent governing body takes the role. For very small firms without independent oversight, the FCA suggests bringing in a knowledgeable “critical friend” to give impartial challenge.

Executives own the content. The data, analysis and action plans come from the business: product, pricing, operations, customer service and complaints. A sensible model gives each outcome an accountable executive, with a single senior manager co-ordinating the report. The FCA chose not to create a dedicated prescribed responsibility for the Duty, so firms map accountability onto their existing Senior Managers and Certification Regime (SM&CR) responsibilities. In practice the CEO (SMF1) carries overall accountability for the conduct of the business, with the Head of Compliance (SMF16) and often a Chief Customer Officer or COO doing much of the co-ordination. Where that compliance seat is thin, the report usually shows it — which is why SMF16 Head of Compliance recruitment is often the first hire a board makes after a difficult reporting cycle.

Second and third lines provide independent input. The FCA’s first review praised firms that gave business areas and committees enough lead time to contribute and that included independent views from compliance, risk and internal audit. A report drafted entirely by the people whose work it assesses is easy for a supervisor to discount.

The Chair has a particular role. It is the Chair who sets the agenda time, decides whether the board sees the full picture or a summary, and makes sure the minutes record a genuine debate. We cover that in more detail in our guide to Consumer Duty, Chair oversight and hiring.

What happened to the board champion

When the Duty was introduced, the FCA’s non-Handbook guidance (FG22/5) expected firms to appoint a Consumer Duty champion at board level, ideally the Chair or a non-executive director. The champion’s job was to raise the Duty regularly in board discussions and help the Chair and CEO make sure it was embedded. The role never appeared in the PRIN 2A rules themselves.

From 27 February 2025, the FCA no longer expects firms to have a Duty champion, although firms can keep the role if they wish. The change was part of a wider push to give firms more flexibility over governance arrangements. Many boards have kept a champion anyway, often the NED who chairs the risk or customer committee, because it gives the board a named person who has read the detail before the report arrives.

The practical point is that removing the expectation did not remove the work. The board still has to approve the report and confirm compliance, and it still needs at least one member who can test the evidence properly. Whether that person carries the champion title matters far less than whether they have the experience to do it.

Outcomes monitoring: the evidence behind the report

The board report is only as good as the monitoring underneath it. PRIN 2A.9 requires firms to monitor and regularly review the outcomes their customers are getting, and the report is where the results of that monitoring reach the board. If the monitoring is weak, no amount of drafting will make the report credible.

In July 2026 the FCA published outcomes monitoring: good practice and areas for improvement, building on its earlier insurance multi-firm review of outcomes monitoring from 2024. The good practice it describes is useful as a checklist for any board reviewing its own framework:

• Defining good outcomes concretely, by product and by stage of the customer journey, rather than in general statements.
• Linking each risk of harm to a measurable indicator, such as complaints, attrition, or compliance monitoring results.
• Using management information proactively, for example analysing rejected applications, tracking vulnerability risk indicators and setting escalation thresholds.
• Clear governance, with named owners, action logs and issues tracked through to resolution.

The areas for improvement are just as telling: frameworks that measure activity rather than customer outcomes, reliance on lagging indicators such as complaints, thresholds with no evidence for why they signal harm, remediation that is never tested, and board oversight that reviews reports rather than challenging them. A board reading its own report should ask, for each metric, what a bad result would look like and what the firm would do about it. If nobody can answer, the metric is decoration.

Outcomes monitoring is also where most of the hiring pressure sits. It needs people who can combine data, product knowledge and conduct judgement — a mix that is harder to find than either a pure analyst or a pure compliance officer. Firms often find that the gap is not in the compliance function itself but in the first-line roles that should own the data, and our compliance and risk search work regularly covers both sides of that line.

What the FCA has found in board reports

The FCA reviewed a sample of first-year reports and in December 2024 published Consumer Duty board reports: good practice and areas for improvement, which it has since updated, including additional points for smaller firms in early 2026. In April 2026 it followed up with observations on year-two reports. Taken together, the findings point to a consistent set of failings.

Data without conclusions

Year-two reports used a wider range of data, including trend analysis and comparisons across customer groups. But many still presented dashboards without saying what the data showed about customer outcomes. Management information that does not support the conclusion drawn from it, thresholds that are never explained, and a lopsided balance between qualitative commentary and numbers were all flagged. The fix is simple to state: every section should end with a judgement, and the judgement should follow from the evidence.

Weak treatment of customer groups

The FCA criticised reports that treated vulnerable customers as a single catch-all group, and fair value analysis that did not cover all the customer groups using a product. Good reports compared outcomes across groups and explained the differences.

Distribution chains

Monitoring of outcomes delivered through intermediaries and outsourced partners was weak in both cycles, with little evidence of information sharing. A firm cannot delegate its Duty responsibilities to a third party, even where customer support is outsourced, so the board needs to see what happens to customers at the end of the chain.

Understanding and support get less attention

Some year-two reports concentrated on products and value and said much less about consumer understanding and consumer support. The FCA wants to see how firms test communications, check comprehension and respond to signs of friction or misunderstanding.

The rubber stamp

The finding that matters most for board composition: most boards approved their reports, but many did not record the challenge they gave. The FCA has been clear that the board should not act as a rubber stamp, and that minutes and papers should set out the discussion, the questions asked and the follow-up actions. A report approved in ten minutes with no recorded debate is weak evidence of oversight, however good the document is.

Action plans without owners

First-year action plans often lacked owners, deadlines or any test of whether they worked. Year-two plans improved, with named owners and progress updates. The next step the FCA wants is evidence that completed actions actually changed customer outcomes.

The FCA’s 2025–26 review of the Duty

Boards will have seen headlines about the FCA “simplifying” the Consumer Duty. It is worth being precise about what has and has not changed.

In 2025 the FCA withdrew the board champion expectation, retired a large number of older Dear CEO letters and multi-firm reports, and set out plans to clarify how the Duty applies in specific areas. In June 2026 it published CP26/23: Consumer Duty scope and proportionality. The consultation proposes removing business with non-UK customers from the Duty’s scope, making it clearer where the Duty does and does not apply, clarifying how firms in distribution chains can rely on each other and apply the Duty in proportion to their role, and explaining how the Duty fits with other product governance rules. Commentators have also noted proposals confirming that board oversight and reporting should be proportionate and focus on matters for which the firm is responsible.

The consultation closed on 18 September 2026. The FCA expects to publish a policy statement and make any new rules in the first quarter of 2027. Until then, the existing rules apply, including the annual board report in PRIN 2A.8. Nothing in the review removes the requirement for the board to review and approve the report and confirm compliance. For firms deep in distribution chains, the final rules may narrow what the report needs to cover; for most retail-facing firms, the core obligation will look much the same.

What the board needs in its senior team

Every failing above comes back to people. Reports become rubber stamps when nobody on the board can read the evidence critically. Monitoring stays reactive when nobody in the executive team owns customer outcomes data. Action plans drift when the compliance function is too stretched to chase them. Before the next reporting cycle, a board should look honestly at four seats.

A Head of Compliance who can run the process

The SMF16 holder usually co-ordinates the report and gives the second-line view on it. That needs someone who understands retail conduct regulation and also has the standing to tell product and pricing executives that their evidence does not hold up. If the current incumbent is leaving, overloaded or untested on the Duty, an interim Chief Compliance Officer can carry a reporting cycle while a permanent appointment is made, and a well-run process for compliance and risk recruitment should start well before the July deadline rather than after it.

An executive who owns customer outcomes data

Outcomes monitoring belongs in the first line. Whether the role is a Chief Customer Officer, a COO or a Head of Customer Outcomes, someone in the executive team needs to own the metrics, the thresholds and the root-cause work. Firms that leave this to compliance end up with a second line marking its own homework.

At least one NED with retail conduct experience

The board needs someone who has run, or closely overseen, retail financial services — product design, distribution, customer operations or conduct risk — and who can tell a meaningful fair value assessment from a superficial one. This is a specific competence, not general financial services governance experience, and it should be written into the brief for the next appointment. Our financial services non-executive recruitment work increasingly starts from exactly this gap, and our guide to Consumer Duty implications for board composition and senior hiring sets out the profile in more depth.

A Chair who makes challenge visible

The FCA’s criticism of undocumented challenge is, in the end, a comment on how board meetings are chaired. A Chair who allows proper time for the report, asks executives to defend their conclusions and makes sure the minutes record what was asked is the cheapest improvement most boards can make. Where a Chair seat is changing, Duty oversight should be part of the assessment — see our Chair of regulated firm recruitment page for how we approach those appointments.

Smaller firms will not have all four seats filled by separate people, and the FCA does not expect them to. A fractional compliance lead, a single experienced NED or an external critical friend can cover much of the ground. What matters is that someone independent of the people producing the evidence has the knowledge to test it, and that the test is written down.

Frequently asked questions

Does the Consumer Duty board report have to be sent to the FCA?

No. Firms do not need to submit it, but they must be able to provide it on request, and the FCA reviews samples of reports and asks for them in supervisory work.

Does the report have to be produced in July?

The rule requires the board to review and approve the report at least annually. The first report was due by 31 July 2024, and many firms have kept that cycle, but the rule does not fix the date.

Do we still need a Consumer Duty board champion?

No. Since 27 February 2025 the FCA has not expected firms to have one, although firms can keep the role. The board’s responsibility for approving the report is unchanged.

Is there a required template?

No. The FCA’s published examples are illustrative. The report should cover the four outcomes, the cross-cutting obligations, poor outcomes and their root causes, actions, and strategy, in a format that suits the firm.

Does CP26/23 change the board report requirement?

Not yet. CP26/23 is a consultation, with final rules expected in Q1 2027. It focuses on scope, proportionality and distribution chains. Until new rules are made, PRIN 2A.8 applies as it stands.

What should a small firm without a board do?

The equivalent governing body approves the report. The FCA suggests bringing in a knowledgeable critical friend for independent challenge, and using proportionate data such as complaints, customer feedback and Financial Ombudsman Service information.