Consumer Duty: The Chair’s Role in Oversight

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 at least annually review and approve a report on the firm’s delivery of good outcomes for retail customers, confirm that the firm is complying with the Duty, and agree any action needed where outcomes fall short. That confirmation is not a board resolution proposed by management and approved with minimal scrutiny. It is a governance judgement 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.

This guide sets out what the FCA expects of the Chair under the Duty, how the rules and the wider regulatory agenda have moved since the Duty came into force, and what nomination committees should build into a Chair brief, a candidate assessment and a succession plan as a result. It is written for boards, nomination committee chairs and shareholders at firms where retail customers are in scope, and draws on our work on Chair of FCA-regulated firm recruitment.

What the FCA Expects the Chair to Do Under Consumer Duty

The FCA’s Consumer Duty Policy Statement PS22/9 set the framework, and the board’s obligations now sit in the Handbook at PRIN 2A.8. The firm must prepare a report for its governing body setting out the results of its outcomes monitoring and any action required. At least annually, the governing body must review and approve that report, confirm that the firm is complying with the Duty, and consider whether the firm’s future business strategy is consistent with it. When it approves the report, the board must also agree any action needed to address risks that customers may not receive good outcomes, any action to put right cases where they have not, and any changes to strategy that the findings require.

That is a demanding set of obligations for a board, and 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 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 broken down 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 said plainly what it does not want to see. In its review of the first annual board reports from 180 firms, it found that some reports appeared to have been produced almost entirely by Compliance or a dedicated Consumer Duty team, that it was not always evident there had been effective challenge from the governing body, and that the board should not be seen simply as a “rubber stamp” for the report. It also flagged reports whose conclusions did not match the underlying MI and actions that lacked owners and timescales. Each of those findings is, in practice, a comment on how the board was chaired. A Chair who presides over a report that reads as management’s document with the board’s signature attached is either not exercising genuine oversight or is not creating the environment in which directors feel able to raise concerns. Neither reflects well on the Chair’s effectiveness, and both create a supervisory relationship problem. Our Consumer Duty annual board report guide covers the report itself in more detail.

What Has Changed Since the Duty Came In

The Duty applied to open products from July 2023 and to closed products from July 2024. Since then the regulatory backdrop has moved in ways that matter for how a Chair role is scoped, and a nomination committee working from a brief drafted in 2023 should check it against the current position.

The board champion is now optional

The original expectation was that boards would appoint a Consumer Duty board champion, usually a non-executive. In his February 2025 speech, “The Gordian knot of growth”, FCA chief executive Nikhil Rathi announced that the FCA had removed that expectation and that boards could decide for themselves whether to have one. Many firms have kept the role. But where a board drops it, the oversight burden it carried does not disappear — it falls back on the board as a whole, and in practice on the Chair, who sets the agenda and decides how much scrutiny the Duty receives. A Chair brief should say which model the board has chosen and what that means for the Chair’s own time and expertise.

Scope and proportionality are under consultation

In June 2026 the FCA published CP26/23, Consumer Duty: scope and proportionality. Among other things it proposes removing business with non-UK customers from scope, clarifying where the Duty does and does not apply, and clarifying how firms in a distribution chain can rely on each other and apply the Duty in proportion to their role. These are proposals: the consultation closed in September 2026 and the FCA expects to publish a policy statement and any final rules in early 2027. The published summary does not propose removing the annual board report, so the core board obligation should be treated as unchanged. For a Chair, the practical point is that the firm’s view of its own scope and role in the distribution chain may shift in 2027, and the board will need to own those judgements rather than simply accept them.

SM&CR reform affects how the Chair is approved

The FCA and PRA confirmed a first set of SM&CR changes in PS26/6 in April 2026, including a 12-week window to submit a senior manager application after an unexpected or temporary change, and higher thresholds for enhanced firms. The FCA then published CP26/37 in October 2026, the second phase of the review. It proposes, among other things, removing the Certification Regime and moving several board roles — including the risk, audit, remuneration and nomination committee chairs and the Senior Independent Director — from pre-approval to notification. The Chair of the governing body is among the functions the FCA proposes to keep as pre-approved in enhanced firms. Again, these are proposals: CP26/37 is open until 22 January 2027 and final rules are expected later in 2027. The Chair appointment will therefore remain a pre-approved SMF9 appointment, with the FCA assessing fitness and propriety before the individual takes the role.

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 target market assessment, distribution strategy review and product governance committee structures — 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 customers. 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 testing used to evaluate customer 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.

Across all four, the common thread is a willingness to ask what good looks like before reviewing the numbers. The FCA’s board report review found that some reports did not define good outcomes clearly or justify the thresholds used in their MI. A Chair who insists that the board agrees its outcome definitions and tolerances in advance has a far stronger basis for challenge than one who reviews whatever metrics management chooses to present.

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 wider governance expectations. A general chairman recruitment brief, written for an unregulated business, will not capture it. The brief should specify:

• Governance oversight of a 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. As a board member, an executive, or a professional adviser with relevant regulatory expertise.
• Familiarity with the FCA’s supervisory approach to the Duty. That means having read and engaged with the FCA’s multi-firm review findings, Dear CEO letters and published feedback on Consumer Duty quality, not just the original policy statement.
• Awareness of the current reform agenda. A candidate should understand where CP26/23 and the SM&CR changes might take the firm, and what remains fixed regardless.

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

Finally, the brief should be honest about the firm’s own position. If the last board report identified material gaps, or if the firm sits in a sector the FCA has singled out for Duty work, the incoming Chair needs to know that before accepting the role, and the committee needs a candidate who has handled a similar position before. Our guide to Consumer Duty implications for board composition and senior hiring covers how the same thinking applies to other board and executive roles.

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 board composition, identifying gaps in the board’s collective ability to oversee the firm’s Duty performance, and addressing those gaps through NED appointments, board education, or the use of specialist advisers to support the board’s work.

In our view, the board of a retail-facing regulated firm should include at least one non-executive with direct experience of consumer-facing financial services operations — at a level that goes beyond strategic oversight to genuine familiarity with how retail customers actually interact with the firm’s products. Larger and more complex boards will usually want more than one. The Chair is responsible for identifying whether this expertise exists on the current board and for raising the succession implications where it does not. Where it does not, a targeted financial services non-executive appointment is often the quickest way to close the gap.

Capability also depends on what reaches the board. The Chair should make sure the compliance and risk functions have the seniority and access to bring Duty concerns to the board directly, rather than filtered through the executive. Where those functions are thin, strengthening them through compliance and risk recruitment is as much a governance decision as a management one.

With the board champion now optional, the Chair should also decide deliberately how the board divides the work. Some boards keep a named champion; some give the Duty to an existing committee, such as risk or a dedicated customer committee; some keep it at full-board level. Any of these can work. What does not work is leaving the question open, so that no individual director feels responsible for pushing the agenda between annual reports.

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 selected primarily on sector credentials without specific assessment of Duty capability — is creating a governance gap that the FCA may well identify during the transition.

The nomination committee’s succession process should include a skills matrix assessment against Consumer Duty competence, and any identified gap should inform both the 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 oversight capacity during the transition must be maintained through the expertise of other directors while the Chair builds familiarity with the firm’s retail conduct position.

Timing matters too. The Chair is a pre-approved role, and the statutory period for the FCA to determine a complete application is three months. A succession plan that starts the search only when the outgoing Chair has given notice leaves little room for an approval process, an induction and a handover around the annual board report cycle. Ideally, the incoming Chair should be in post and approved before the report they will be asked to sign off is drafted. For firms considering a candidate who has not chaired a regulated board before, our guide to what FCA approval requires for a first-time Chair sets out how to prepare the application.

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

The FCA’s interest is not whether the firm has a Consumer Duty programme, but whether the board is satisfied that the programme is delivering good outcomes, what evidence the board reviewed to reach that conclusion, and where the board itself believes further improvement is needed. Those are the questions a Chair should expect, whether in a supervisory meeting, an approval interview or a request for the board report and the minutes behind it. A Chair who cannot answer them with reference to specific evidence from the annual assessment is demonstrating an oversight approach the regulator is unlikely to regard as adequate.

This is why board minutes matter. The FCA’s board report review cited, as good practice, minutes showing the board requesting further information and one firm keeping a tracker of board requests and the actions taken in response. A Chair who makes sure challenge is recorded, and followed through, is creating the evidence that the board’s confirmation was earned.

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 oversight requirements of their firm. Our regulated firm Chair search service sets out how we run these appointments; to discuss one, call 0203 834 9616.

Consumer Duty and the Chair’s Relationship with the FCA

Consumer Duty has changed the nature of the FCA’s engagement with regulated firm Chairs. At retail-facing firms, the annual board report — its methodology, its conclusions, and the board’s own assessment of where performance gaps remain — is an obvious subject for supervisory discussion. A Chair who is unable to speak to the specific content of their firm’s report, who defers entirely to management on questions about the fair value methodology or the consumer support data, is demonstrating a level of board engagement with the Duty that the FCA is likely to regard as inadequate.

This has a direct bearing on the Chair appointment decision. The FCA’s assessment of a proposed SMF9 holder includes whether the individual has the capability to manage the supervisory relationship 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 approved the report, but being able to speak to its content with genuine understanding. Boards should test Chair candidates on this specifically, ideally through a scenario-based discussion of their familiarity with Duty governance, rather than 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 priority in their first six months — reviewing the most recent annual board report with fresh eyes, meeting the compliance function and the executive Consumer Duty lead to understand the current state of delivery, and assessing what changes to the board’s oversight process they would recommend. This early investment establishes the Chair’s credibility on the Duty with both the board and the FCA, and lays the foundation for the quality of supervisory engagement the annual 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 these customers is part of the annual assessment, and the FCA expects genuine governance engagement rather than a policy on file.

The FCA’s board report review is instructive here. It highlighted, as good practice, reports that analysed outcomes for customers with characteristics of vulnerability. It also described one firm that set out extensive vulnerability work while its own MI showed fewer than half of customers receiving good outcomes. That is precisely the gap a Chair is there to catch: activity reported as progress, without the outcome data to support it.

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 judge whether the MI is adequate to the task. Exec Capital assesses Chair candidates at retail-facing regulated firms against their track record in vulnerable customer governance as part of our Consumer Duty capability evaluation.

Testing Consumer Duty Capability at Interview

Most Chair candidates for regulated boards will say the right things about Consumer Duty. The task for the nomination committee is to find out whether they can do the work. Questions that tend to separate genuine experience from familiarity with the vocabulary include:

• “Tell us about a time the board did not accept management’s Duty assessment.” What did the board ask for, what came back, and what changed as a result?
• “How would you know our fair value assessment was wrong?” A strong candidate will talk about cost layers, comparators and outcome evidence, not just process.
• “What would you want to see before signing our next board report?” Listen for outcome definitions, thresholds, root cause analysis and action owners.
• “How should this board organise its Duty oversight now that a champion is optional?” There is no single right answer, but there should be a reasoned one.
• “Walk us through how you would prepare for a supervisory meeting on our report.” This tests whether the candidate expects to own the content or to be briefed on it.

Referencing should follow the same line. Speaking to the compliance director or company secretary who worked with a candidate on a previous board report often tells a committee more than a conversation with a fellow non-executive.

Frequently asked questions

Does the Chair have to be the Consumer Duty board champion?

No. Since February 2025 the FCA no longer expects firms to appoint a board champion at all; boards decide for themselves. Where a firm keeps the role, it is usually held by a non-executive other than the Chair, but the Chair remains responsible for how the board as a whole oversees the Duty.

How often must the board approve the Consumer Duty report?

At least annually under PRIN 2A.8. The board must review and approve the report, confirm the firm is complying with the Duty, and agree any actions and strategy changes the findings require.

Will the Chair of a regulated firm still need FCA pre-approval?

Yes. SMF9 is a pre-approved function today, and under the CP26/37 proposals the Chair of the governing body would stay pre-approved in enhanced firms while several committee chair roles move to notification. Those proposals are still out for consultation until January 2027.

Does CP26/23 reduce what the board has to do?

CP26/23 proposes clarifying the Duty’s scope and how it applies proportionately across distribution chains, with a policy statement expected in early 2027. The published proposals do not remove the annual board report, so boards should plan on the current obligations continuing.

Can we appoint a Chair without retail financial services experience?

It can be done, but the gap needs a credible plan: other directors with deep Duty experience, a structured induction and a realistic timetable before the Chair leads a board report cycle. The FCA will look at the board as a whole as well as the individual.