Consumer Duty: Implications for Board Composition and Senior Hiring Decisions

Consumer Duty: Implications for Board Composition and Senior Hiring Decisions

Consumer Duty is the most significant shift in the FCA’s regulatory philosophy in a generation. The move from rules-based compliance to an outcomes-focused standard — where firms must demonstrate that retail clients are consistently receiving good outcomes — has changed the expectations placed on boards and senior management in ways that are still being fully absorbed. One of the clearest practical consequences is that it has changed who regulated firms need to hire, and what they need those individuals to demonstrate.

This guide is intended for boards, Nomination Committees, and investors at FCA-regulated firms who are thinking carefully about whether their current leadership team has the competence Consumer Duty requires — and what to do if it does not.

The Board’s Direct Accountability Under Consumer Duty

The FCA has been explicit: Consumer Duty is a board-level responsibility, not a compliance function responsibility. The annual Consumer Duty board report must be approved by the full board, which means every director — executive and non-executive — is formally confirming that the firm is delivering good outcomes for retail clients. That is a material personal commitment, and boards that rubber-stamp a management-produced document without genuinely scrutinising it are exposed if the FCA’s supervisory assessment subsequently disagrees.

This accountability structure has made Consumer Duty literacy a board-level competence requirement. Boards that lack directors with the depth of knowledge to challenge management’s Consumer Duty assertions — to interrogate the data, question the methodology, and identify gaps in the evidence of good outcomes — are structurally weak in a way that creates both regulatory and governance risk. Recognising this gap and addressing it through the next NED appointment is the most direct lever available to the chair.

The FCA has also made clear that it expects the board to be actively engaged in Consumer Duty oversight throughout the year, not just at the point of approving the annual report. Board minutes, management information packs, and committee papers are all potential evidence of whether the board is providing genuine oversight. Appointment decisions should take account of whether incoming directors will be able to engage meaningfully with the routine Consumer Duty management information the firm produces.

What Consumer Duty Literacy Means in Practice

Consumer Duty literacy at board level is not the same as technical regulatory knowledge. Directors are not expected to understand the detail of every FCA policy statement. What they are expected to do is apply sound judgment to the question of whether the firm’s products, services, pricing, and communications are genuinely serving retail clients well — and to escalate concerns when the evidence suggests they are not.

Candidates who have operated in consumer-facing financial services environments — retail banking, wealth management, insurance, consumer credit — and who have been involved in product design, pricing decisions, or client experience governance are typically better positioned to provide this judgment than those who have operated exclusively in wholesale or institutional contexts. Boards dominated by individuals from institutional backgrounds may have a structural gap in Consumer Duty oversight capability that appointment decisions should address.

The practical test of Consumer Duty literacy is whether a director, reading a management pack that shows customer satisfaction scores are high and complaint volumes are low, would ask the right follow-up questions — about the methodology of the satisfaction survey, about whether complaints data captures all forms of poor outcome, about whether the client cohorts with the lowest satisfaction scores are the ones most at risk. Directors who accept high-level metrics without probing their construction are not providing the oversight the Duty requires.

The Four Outcome Areas and Their Hiring Implications

Products and services. Firms must ensure their products and services are designed to meet the needs of identifiable retail customer groups and distributed through channels appropriate to those groups. This requires executives and NEDs who understand product design from a client perspective — not just from a commercial or risk perspective. Heads of product, distribution directors, and chief customer officers with a genuine track record of customer-centred design are in demand. The key hiring question is whether the candidate has actually changed a product or distribution channel as a result of a client outcomes assessment, or whether their Consumer Duty engagement has remained at the policy level.

Price and value. Firms must demonstrate that the total cost of their products and services represents fair value for the outcomes delivered. This is a rigorous standard that requires genuine analytical work — not simply confirming that prices are competitive in the market. CFOs, pricing directors, and strategy executives who understand how to construct and defend a value-for-money assessment are increasingly valued. The ability to explain to the FCA why a product that appears expensive relative to its features nonetheless represents fair value — in terms of the service quality, the risk management, the ongoing support, or the client outcomes it delivers — requires a level of analytical and commercial sophistication that is not universal.

Consumer understanding. Firms must ensure that their communications enable retail clients to make informed decisions at each stage of the product lifecycle. This elevates the importance of clear communication capability throughout the senior team and makes it a relevant assessment criterion in a wider range of hiring decisions than it was previously. Marketing directors, digital product heads, and client experience executives are the most directly affected, but the consumer understanding standard also applies to the quality of information the board itself receives and relies upon.

Consumer support. Firms must provide retail clients with support that meets their needs throughout the product lifecycle — particularly when clients are experiencing difficulty, exercising rights such as cancellation or switching, or seeking to understand their options. This has particular implications for operational and technology leadership. The systems, processes and people that deliver client support need to be adequate, and the executive responsible for them needs to understand what adequate looks like under the Duty — not just in terms of call handling times, but in terms of the quality of the outcomes the support function actually produces for clients.

Gaps That Appointment Decisions Should Address

Boards reviewing their composition in light of Consumer Duty should consider three specific questions. First: does the board have at least one director with direct experience of consumer-facing financial services, ideally in a product, distribution, or client experience role? Second: is there a director with the quantitative capability to scrutinise value-for-money analysis rather than simply accepting management’s conclusions? Third: is the board receiving the right management information — disaggregated by customer segment, product, and channel — to form a genuine view of client outcomes?

Where the answer to any of these questions is no, the next NED appointment should be structured specifically to address the gap. This may mean departing from the profile that would otherwise have been the natural next hire — a board that is strong on credit risk and capital markets may need to prioritise consumer-facing experience over additional financial markets expertise for its next appointment, even if the former is less obviously comfortable territory.

The board skills matrix should be reviewed against Consumer Duty requirements specifically, not just against generic financial services governance criteria. Many firms have conducted skills matrix reviews in recent years but have not updated them to reflect the competences Consumer Duty requires. A skills matrix that does not include Consumer Duty capability as an explicit category is not providing the Nomination Committee with the information it needs to prioritise appointments correctly.

Executive Hiring Decisions

At the executive level, Consumer Duty has most visibly changed the brief for CEOs, Chief Customer Officers, Compliance Directors, and heads of distribution. In each case, boards are looking for individuals who can demonstrate not just familiarity with the regulation but a genuine understanding of what good outcomes look like in practice — and a track record of making decisions that produce them.

The compliance community has also been affected. The Compliance Director or Chief Compliance Officer at a regulated firm now needs to have Consumer Duty expertise as a core competency, not an adjacent knowledge area. Firms where the compliance function has historically focused on conduct of business rules and MiFID compliance may find that existing senior compliance staff need development support — or that the next senior compliance hire needs to be specifically profiled for Consumer Duty depth. The ability to interpret ambiguous client outcome data, identify emerging risks before they crystallise into regulatory issues, and advise the board on where the firm’s position is vulnerable to FCA challenge are all skills that Consumer Duty-era compliance leadership requires.

The FCA’s Multi-Firm Review Findings

The FCA has published findings from its multi-firm reviews of Consumer Duty implementation that provide a clear picture of where firms are falling short and, by implication, what competences boards and senior management need to develop. Common themes include: boards receiving high-level assurance that Consumer Duty requirements are being met without supporting evidence of good outcomes; pricing and value assessments that are more descriptive than analytical; and consumer support processes that are designed around the firm’s operational convenience rather than the client’s needs.

Each of these findings has a direct hiring implication. Where a firm’s Consumer Duty review has identified any of these gaps, the board should consider whether the current executive team has the competence to address them — or whether appointment decisions need to bring in individuals with specific expertise in the areas where the firm is most vulnerable.

Consumer Duty and Remuneration Design

Consumer Duty has also influenced how regulated firms design remuneration structures, particularly at the senior level. The FCA has been clear that it expects firms’ remuneration arrangements to support — not undermine — the delivery of good outcomes for retail clients. Where executive remuneration is primarily tied to revenue growth or new business acquisition, without any reference to the quality of client outcomes, the FCA may challenge whether the incentive structure is aligned with the Consumer Duty obligations.

This has implications for hiring. Executives who are evaluating a move to a regulated firm will assess the remuneration structure — and candidates with strong Consumer Duty credentials may be uncomfortable accepting packages that tie their variable compensation entirely to financial performance metrics without any reference to client outcomes. Boards designing packages for senior appointments in a post-Consumer Duty environment should consider whether the incentive structure sends the right signal about the firm’s commitment to the Duty.

Supervisory Risk and the Quality of the Senior Team

The FCA has been using its supervisory tools actively since Consumer Duty came into force. Multi-firm reviews, targeted data requests, and firm-specific visits have all been deployed. Firms that face supervisory engagement on Consumer Duty compliance quickly discover that the quality of the board’s and senior management’s engagement with the regulator is as important as the substance of the firm’s compliance position.

Boards with directors who can engage credibly and constructively with FCA supervisors — who understand the regulatory framework, can articulate the firm’s position clearly, and can acknowledge weaknesses without unnecessarily alarming the regulator — consistently manage supervisory relationships more effectively. This is not a trivial skill and it should be assessed when relevant appointments arise. Candidates who have direct experience of representing a firm in FCA supervisory meetings, or who have been involved in producing responses to FCA data requests on Consumer Duty matters, are more valuable than those who have managed Consumer Duty only at the internal governance level.

Working with Exec Capital

Exec Capital works with FCA-regulated firms across retail banking, wealth management, insurance, consumer credit and investment services to place executives and non-executive directors with the competence Consumer Duty requires. We assess candidates specifically against the outcome areas relevant to each role and advise boards and Nomination Committees on how to structure the brief to attract the right profile. Our searches are conducted on a retained, discreet basis, and we provide detailed candidate assessments that address Consumer Duty competence specifically rather than treating it as a generic regulatory awareness requirement.

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.