FCA announces next step on Consumer Duty: customer outcome monitoring must be evidenced.

Firms have worked tirelessly and spend hundreds of millions of pounds on compliance with the FCA’s Consumer Duty rules over the last two years. But more work is ahead as the FCA moves into its next phase of enforcement.

The fundamental shift that accompanied the introduction of Consumer Duty was from prescription to principles: specifically, from prescribed inputs, to the principle of good customer outcomes.

Now the FCA has added a third keyword: proof.

The FCA’s policy and strategy director, Charlotte Clark, spoke at a conference recently (as reported in FT Adviser). She said the next step would be a deliberate move from “prescription to principles with proof” – meaning that firms now have to provide evidence that customers are getting good outcomes from the changes made.

One example she gave was that firms should be able to show that their communications are successful at moving customers into better value products. The FCA’s attitude seems to be that new customers are getting better deals as a result of clearer information, but long-standing customers (especially vulnerable ones) are not switching to more suitable products.

Along with this new priority, the FCA will be working on simplifying its own regulations and removing prescriptive templates.

The key requirement, though, will be for firms to provide definitive evidence that customer outcomes are improving.

At the same conference James Daley, managing director of Fairer Finance, said “we’re not even halfway there to get to the standard that the consumer duty implies” – so there’s plenty of work still to do.

So what should you focus on next?

As usual, the FCA hasn’t specified how this evidence should be collected. But based on prior work on customer outcomes, we believe that they would consider the following methods as high quality evidence:

1. Audit of product suitability: interview a sufficient sample of your customers, discuss their needs and identify whether they are using the product that best meets them. This can be done before and after introduction of a new communications process, to demonstrate that more customers are shifting into suitable products. The sample size depends on the complexity of your product range but this could work with anywhere from 20 to 200 interviews.
2. Behavioural test of communications: show variations of new communications to a sample of customers and measure their expected behaviour before and after. You can use this to identify the comms that are most likely to shift them towards better products.
3. Direct monitoring of outcomes: a tracker taking a quarterly, half-yearly or annual sample of customers and surveying them about the outcomes they get from your products. This survey can cover all four customer outcomes: products that meet their needs, price & value, comprehension and support. There are ready-made customer outcome surveys available in the industry (including from Irrational Agency) that can be deployed quickly and cost effectively to measure these outcomes. The tracker can be used to compare your outcomes with others in the industry, and to monitor progress over time as you make process improvements.

As you’re planning your next Consumer Duty board report and your compliance activities for 2026-27, think about whether you are providing enough evidence of good outcomes to the FCA. If you’re not sure, talk to us about what it would take to implement any of the approaches above. You can email me on leigh@irrationalagency.com.