Consumer Duty board reports: what is required for the 2026 editions?

The UK Financial Conduct Authority’s (FCA) Consumer Duty has now been in force for over two years. For many firms, the deadline for the next iteration of their annual Consumer Duty board reports will fall later in 2026.

The financial services landscape has changed significantly in the last few years, including the FCA’s approach to supervision and regulation. Therefore, while firms should now have a useful body of work across previous iterations, getting this year’s board report right will be vital for firms subject to the Duty.

In this article, we share our reflections on the importance of this year’s version of these documents, and what the FCA requires from them, based on our experience of helping firms to apply the Duty practically.¹

An overhaul of the FCA’s supervisory approach?

Much has been written recently about the FCA’s approach to conduct regulation, and its shift from prescriptive rules towards more supervisory-led activity. In part, this relates to the FCA’s desire to be a more ‘proportionate’ regulator, and to reduce the regulatory burden associated with detailed rules. It also forms part of its broader desire to support growth and innovation.

We are already seeing several examples of the FCA preferring to drive better outcomes via the supervisory channels of its outcomes-based Consumer Duty toolkit. The findings of two FCA market studies—the Premium Finance market study Final Report and the Pure Protection market study Interim Report—provide recent examples of this. The latter, for instance, places the emphasis on the FCA’s intent to address the Protection Gap (with concerns about areas of poor practice to be dealt with through supervision rather than specific remedies or new rules).

In line with this, the FCA has referred to an ‘overhaul’ of the supervisory model.² This will involve FCA supervisors employing a ‘risk-based’ approach, using data to identify potential harm, and focusing in on outlier firms and products.

Even aside from the regulator’s changing approach, the world already looks quite different to the one that existed when the Consumer Duty came into force in 2023. More than 75% of financial services firms are now using AI,³ and the FCA itself is using AI in its drive to become ‘a smarter regulator’.⁴ New products will also come under the Duty in the coming months and years (including cryptoassets markets⁵ and Buy-Now Pay-Later⁶).

However, within this changing landscape, the FCA has been clear that it is doubling down on its expectations of firms, and the use of its own powers, under the Consumer Duty toolkit. As part of this toolkit, there continues to be significant FCA focus on whether firms deliver ‘fair value’, and on firms’ reviews of communications and customer understanding.⁷

The FCA also requires annual reports on the implementation of the Consumer Duty to be prepared for Boards (or other governing bodies). In early 2026, the FCA updated its good and poor practice publication concerning these reports.⁸

We discuss below the aims and requirements of the annual reports, and set out some of the key elements that should be captured in the 2026 edition.

A focus on outcomes, and continued Board engagement

The FCA may have removed the obligation for firms to have ‘Consumer Duty Board Champions’,⁹ but it will still be expecting effective engagement and challenge from firms’ governing bodies on the process and content of these reports.

The FCA requires firms to prepare a report for their governing body setting out:¹⁰

• the results of the monitoring of consumer outcomes, and any evidence of poor outcomes;
• an overview of the actions taken to address any risks or issues;
• how the firm’s future business strategy is consistent with acting to deliver good outcomes under the Duty.

These reports represent a formal review of how the firm is complying with the Duty, and are required to be signed off by the Board. It is therefore important that firms and their governing bodies get them right. They will need to be robust to scrutiny from the regulator, and enable each Board to satisfy itself that the firm is compliant with the requirements of the Consumer Duty.¹¹

Many firms are already testing versions of this year’s reports and underlying data with their governing bodies. But what exactly should this year’s Consumer Duty annual report cover?

What does the data show?

Boards will need to be satisfied that there is evidence of the firm applying the Duty. The FCA has explained that for this year’s board reports, it is expecting to see more on outcomes monitoring, and on linking data to consumer outcomes.¹² Three topics, in particular, are key areas of focus for firms and the regulator, and will need to feed into the annual report.¹³

• Fair value. ‘What is a “fair” price?’ This can often appear to be a daunting question to answer, particularly where supervisors will necessarily be applying a degree of judgment. The first key steps for firms are to have robust fair value frameworks in place, and to be able to articulate how these are applied in practice.¹⁴ It can be useful for firms to ask themselves a number of questions when developing, implementing, and reviewing fair value frameworks.¹⁵ An important one is ‘how does the business (model) operate?’—what is driving profitability, and is this sustainable? Another is to evaluate outcomes for different customer segments (for example, segmenting by product usage, or by customer characteristic).
• Communications and consumer understanding. To a large extent, good consumer outcomes can be expected if it can be evidenced that communications engage effectively with customers (enabling consumers to be in a position to make well-informed decisions). A robust approach to giving evidence of good customer communication will draw on insights from behavioural economics.¹⁶
• ‘Foreseeable’ outcomes. Firms will need to ask ‘what outcomes are foreseeable?’. Here, it can be useful to map out the harms that could arise, and what data can be used to monitor potential outcomes (in our experience good practice involves updating a harms mapping document on a regular basis). When monitoring metrics and preparing management information, firms will need to look at the distribution of outcomes (i.e. not just averages). For some firms, technology may have changed how this applies compared with previous years. For instance, new risks and opportunities may be present for firms introducing AI into their business models.¹⁷ In some cases, ‘algorithmic audits’ can be used to concretely look at outcomes that can be readily foreseen. Only looking at evidence of actual outcomes—i.e. after harm may have arisen—may be too late from a supervisory perspective. Again, a robust application of behavioural economics will be vital here.

This will look different for firms of different sizes. The FCA has published further insight on how small firms can meet the requirements in a proportionate way, including through more targeted management information, working with trade associations, or using a ‘critical friend’ to provide an independent review of the approach and report.¹⁸

Keeping Consumer Duty compliance on track

Given that the Duty has been in place since the end of July 2023, firms will be expected to have the elements well-embedded. However, the FCA has always said that the Duty would not be ‘once and done’, and for some firms there will still be room for improvement.¹⁹

Ultimately, the real litmus test will be the evidence and analysis that demonstrates good consumer outcomes, rather than the preparation of governance documents in itself. However, the board report deadline can act as an opportunity and incentive to:

• review any potential gaps in Consumer Duty compliance;
• review and confirm whether current management information and data reporting serve their purpose effectively;
• ensure the evidence base remains robust (including where the business model, product portfolio or customer base have changed over the past year); and
• signal to the FCA that the requirements of the Duty continue to be taken seriously, shaping firm culture.

The report will need to explain where issues have been identified, and what actions have been taken or planned to address these.

In a timely update to the FCA’s way of communicating its sector-specific priorities, the FCA is introducing annual Regulatory Priorities reports for each sector, with the first editions published in April 2026.²⁰ Firms will need to reflect on any implications for their ongoing Consumer Duty actions.

Finally, an important element that is sometimes neglected is explaining how the firm contributes to—and is subject to—good market functioning. Where there is healthy, competitive market functioning, economics tells us that this will go a long way to ensuring good consumer outcomes (a message that is also in line with the FCA’s competition objective).²¹

Our experience is that for many firms a lot of this work has already been done. The 2026 annual report is therefore an opportunity for firms to set out the evidence on consumer outcomes and the lessons that have been learned.

Please contact one of Oxera’s Financial Services team to discuss any of the topics raised in this article, or if you require support with compiling your annual Consumer Duty report.