The UK Financial Conduct Authority (FCA) has published a review of how firms are monitoring customer outcomes under the Consumer Duty, revealing that while some firms have adopted strong, evidence-based approaches, others need to make their monitoring more proactive and outcomes-focused.
The Consumer Duty was designed to ensure firms focus on the outcomes that matter to customers. According to the FCA, understanding the actual experiences of people and identifying potential harm are essential to delivering improvements. Outcomes monitoring is at the heart of helping consumers better navigate their financial lives.
The review found that the strongest approaches were structured, evidence-based, and focused on using information to identify risks. Effective firms did not simply collect management information; they used it to understand what was happening across the customer journey, challenge performance, and drive improvements for consumers.
However, some firms need to do more to make monitoring proactive and outcomes-focused, demonstrate how information drives action, and test whether interventions are effective. The FCA noted that some monitoring frameworks were not sufficiently focused on customer outcomes or the risks of harm, relying on high-level monitoring without a clear structure for identifying poor outcomes.
Strong firms had clear monitoring frameworks that defined what good outcomes looked like in practice and linked them to different stages of the customer journey. They translated customer outcomes into measurable indicators and regularly reviewed whether they worked. The FCA saw proportionate examples from smaller firms, showing that complex systems are not necessary if the approach is clear, risk-based, and linked to action.
The FCA also highlighted the importance of using data effectively. Stronger firms produced clear evidence that analysis helped improve customer outcomes, using indicators and thresholds to identify foreseeable harm, including customer vulnerability or unsuitable applications. But some firms relied on reactive or poorly defined indicators, lacked clear audit trails, and could not demonstrate how data was used to identify emerging risks.
The review emphasized the need for effective arrangements with third parties and distribution partners. Customers experience a product as a whole, so firms should understand the outcomes customers are experiencing and get relevant information from third parties where needed. The FCA noted positive examples of firms using management information and regular reviews with partners.
Governance also came under scrutiny. While board and senior management engagement has improved compared with earlier reviews, the FCA wants clearer evidence of challenge, discussion, and decision-making. Boards should demonstrate how they have scrutinised outcomes, challenged assumptions, and driven improvements.
The FCA concluded that the strongest firms focus on outcomes, not activity. They identify an issue, understand its cause, take action, and assess whether that action improved outcomes. As firms continue embedding the Duty, they should consider whether their monitoring gives them a clear view of customer outcomes and leads to timely, effective action.
