The FCA has reminded regulated firms that it requires the first Consumer Duty board reports to be completed by 31 July and says it will ask "a broad sample" of firms to supply the reports for review.

Regulated firms are expected to produce an annual board report on how they have implemented the FCA’s new Consumer Duty requirements.

The reports need to cover any weaknesses or failings and what firms have done to address them.

The Consumer Duty came into effect in July last year for new products and will be extended to legacy products from next month.

As part of an update to the Consumer Duty regulations this week, the FCA has this week reminded firms to produce their board reports and given more detail of requirements.

FCA guidance says: “Our rules require a firm’s board, or equivalent governing body, to review and approve a report on the outcomes received by retail customers. This assessment needs to be done at least once a year, so for firms with new and existing products and services the first report is due by 31 July 2024.”

The board assessments need to include: 

• The results of the monitoring undertaken to assess whether products and services are delivering expected outcomes in line with the Duty

• Any evidence of poor outcomes, including whether any group of customers is receiving worse outcomes compared to another group, and an evaluation of the impact and the root cause 

• 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 

Before signing off the assessment, a regulated firm’s board or equivalent governing body needs to specify any actions required to address any identified risks, highlight any action required to address poor outcomes experienced by customers and explain whether any changes to the firm’s future business strategy are required.

The FCA says its rules do not set a specific template for the board reports and it is for individual firms to determine “what is appropriate for them.”

The regulator says the length and detail of reports will depend on the nature and extent of a firm’s business activities and the impact they have on consumer outcomes.

Smaller firms without a board can consider whether they can bring “some independence and objectivity into their assessment in the absence of a board” by using a ‘critical friend’ who can provide support and challenge, the FCA said. 

The FCA says that while it will not require boards to submit their reports it will review a “broad sample” of reports and will publish our insights to help "drive good practice."

• Consumer Duty regulations updated: Consumer Duty: Updated Regulations