Bite-size: Consumer Duty outcomes monitoring - are firms focusing on the right things?
The FCA wants firms to understand what customers experience, not just what the data says
The FCA has published further commentary on outcomes monitoring under the Consumer Duty, sharing examples of good practice and areas where firms still need to improve. The focus is on using information to understand what customers are experiencing, identify where things may be going wrong and take action before customer harm occurs.
The regulator found that firms making the most progress are those that can show a clear link between the information they collect, the decisions they make and the changes they implement. Outcomes monitoring has become a key part of Consumer Duty because it helps firms assess whether products, services and customer journeys are delivering the outcomes they were designed to achieve.
A common theme throughout the FCA's observations is that firms should look beyond management information reports and dashboards. Good monitoring starts with understanding what a good customer outcome looks like and identifying the signs that show whether customers are receiving that outcome in practice.
The FCA found that firms performing well had monitoring arrangements linked to different stages of the customer journey. They had identified points where customers might struggle or suffer harm and were able to explain why they monitored certain indicators, what the information was telling them and what action had been taken when concerns emerged.
The regulator also highlighted positive examples from smaller firms. Rather than relying on complex systems, these businesses focused on a small number of key risks and used existing information to monitor customer outcomes. The FCA's view is that effective monitoring should be proportionate to the size and complexity of the business but still capable of identifying poor outcomes and driving action where needed.
Data and management information remain important but the FCA wants firms to demonstrate how that information is being used. Firms receiving positive feedback were able to show that data helped identify risks, informed decisions and supported improvements. The FCA also identified examples where firms relied on high-level reporting and could not clearly demonstrate how information was being used to assess outcomes or identify emerging risks.
What good looks like
The FCA highlighted a number of common features among firms that were making the most progress:
Monitoring linked to key stages of the customer journey rather than relying solely on high-level reporting.
Clear definitions of what good customer outcomes look like and how they can be measured.
Management information that helps identify emerging risks, vulnerable customer outcomes and areas of customer friction.
Evidence that boards and senior leaders are reviewing outcomes, challenging findings and tracking actions.
Clear links between issues identified, decisions taken and improvements made.
Follow-up reviews to assess whether changes have improved customer outcomes.
Many of these themes feature in the Consumer Duty work Auxillias is currently delivering for clients across the motor, asset and consumer finance sectors.
The FCA continues to place significant emphasis on third parties and distribution partners. Customers generally don’t distinguish between the firms involved in delivering a product or service and instead judge the overall experience. Firms should therefore understand the outcomes customers are receiving throughout the distribution chain and obtain relevant information from partners where required.
Governance remains another area of focus. The regulator acknowledges that board and senior management engagement has improved but it still wants firms to provide evidence that boards are actively reviewing outcomes, questioning assumptions and driving change where needed.
The firms receiving the most positive feedback were able to demonstrate a complete cycle. They identified an issue, understood the cause, implemented a solution and then assessed whether the change had improved outcomes. This reflects the FCA's wider approach to Consumer Duty supervision, with increasing focus on evidence that firms are using information to improve customer outcomes rather than simply reporting what has happened.
Key takeaway
The FCA is placing increasing importance on evidence. Firms should be able to show how they monitor customer outcomes, why they have selected particular measures, what information is telling them and what action has followed. Good outcomes monitoring creates a clear thread between customer experience, management information, governance discussions and the decisions made by the business. Firms that can evidence that journey are likely to be better placed during future supervisory reviews.
How Auxillias can help
Outcomes monitoring sits at the centre of many of the Consumer Duty reviews and governance projects Auxillias is currently supporting. Our Consumer Duty team works with firms to define what good customer outcomes look like, identify meaningful outcome measures and build monitoring arrangements that provide a clear view of customer experience across the customer journey. This includes reviewing management information and board reporting, assessing fair value and vulnerable customer outcomes, analysing complaints and customer feedback, reviewing distribution chain oversight arrangements and helping firms evidence the actions taken when issues are identified.
We also support firms with annual Consumer Duty board reports, Consumer Duty health checks, gap analyses, governance reviews and remediation programmes, helping businesses demonstrate that monitoring is leading to informed decisions and improved customer outcomes.
Contact us via the details on this page.
