FCA Review: Consumer Duty Outcomes Monitoring: good practice and areas for improvement

Overview

On 27 July 2026, the FCA published its review of firms’ approaches to Outcomes Monitoring under the Consumer Duty. The FCA’s review surveyed firms across various sectors, business models and sizes, focussing on three areas: (1) strategy and framework for outcomes monitoring; (2) use of data, management information (MI) and testing; and (3) governance, oversight and culture. This update closely follows the FCA’s review of Products & Services: good practice and areas for improvement published on 10 July 2026. For more information, see our Legal Update here.

Strategy and Framework

Under the Consumer Duty, firms must monitor whether customers are getting good outcomes across key stages of the customer journey and all four outcomes: products and services; price and value; consumer understanding; and consumer support. Firms are required to identify where there is a potential risk of consumer harm and act where outcomes can be improved.

Good Practice Identified by the FCA

• Clear, practical outcome definitions: Firms achieve more effective monitoring where they define what good outcomes look like in the context of each product, rather than having a single broad statement covering all products. Similarly, firms should identify what good looks like at key stages of the customer journey: from first engagement, to onboarding, to use of the product or service, all the way through to exit and even post-exit support. Firms should be able to monitor specific outcomes at each stage rather than rely on high-level indicators.  
• Meaningful metrics and thresholds: Review and challenge metrics used to track outcomes to ensure they are set at the right thresholds and are not set too low. Ensure these draw on a sufficiently broad spectrum of data including product performance, operational performance, quality assurance testing, customer experience, and complaints. Review targets regularly, and at least annually, to ensure metrics reflect the most relevant risks.
• Structured, joined-up frameworks: Integrated monitoring frameworks enable governance forums to review metrics holistically across different business functions, avoiding silos. Ensure issues are investigated using a structured root cause process, track action points and conduct follow-up reviews to check changes have been implemented and are working as intended to improve outcomes. Set clearly defined responsibilities for reviewing MI, making decisions and taking corrective action. Consider how data from other firms involved in the customer journey (e.g. brokers and service providers) can help inform and seek to reduce the risks of gaps in visibility of customer outcomes across the customer journey. 

Areas for Improvement

• Frameworks not focused on customer outcomes: Some firms describe outcomes at a high level without clear structures or metrics for identifying poor outcomes at each stage of the customer journey or why they occur. Frameworks that are not aligned to customer journeys or clearly defined outcomes are less effective at identifying emerging issues or supporting timely action and will likely fall short of FCA expectations. 
• Weak links between outcomes, metrics and customer journeys: Some firms use operational metrics (such as conversion rates or review completion) as a proxy for customer outcomes without clearly defining what good or poor outcomes look like at each stage of the journey. 
• Limited coverage of customer groups: The FCA found limited evidence of how outcomes differ across customer groups, including vulnerable customers, making it harder to know which customers are at risk of poor outcomes or need more support.

Data, MI and Testing

Good Practice Identified by the FCA

• Testing for foreseeable harm: Analyse MI for trends and outliers to identify potential harm early. One firm tested rejected-applicant data to check distribution channels reached the target market. Another firm offering high-risk products used financial vulnerability indicators to identify customers whose net deposits were high compared to their declared income, indicating potential borrowing to trade. It took tailored action, including checking customers’ welfare and closing accounts where appropriate.
• MI driving tangible improvements: Firms have been identifying possible friction points in customer journeys, tracking operational measures such as response and resolution times. Where there was demand for a more direct query channel, one firm introduced in-app chat and AI routing, reducing average first response time from 22 hours to under 2 minutes, and resolution time from 4 days to under 3 hours. The AI chatbot also used keyword recognition to help identify indicators of potential vulnerability and escalated relevant cases to the right team for prioritised handling. 
• Innovative use of AI testing and technology solutions: Some firms are using synthetic AI-based testing of communications to identify where communications may confuse or mislead different customer groups. Results are then benchmarked against human testing to assess the match rates. Some smaller firms are driving better consistency in their client record keeping by using meeting recording software. These tools help capture personal circumstances and potential vulnerability indicators, while also supporting the flow of client conversations.

Areas for Improvement

• Narrow and reactive indicators: Some firms rely on a limited and largely reactive approach to outcomes monitoring. Common weaknesses include over-reliance on lagging indicators rather than forward-looking metrics, and incomplete audit trails from issue identification to actions and outcomes. Inconsistencies or key gaps in data undermine confidence in outcomes assessments and fall short of FCA expectations.
• No evidence of how MI leads to decisions and improved outcomes: MI is collected but firms cannot show how it helps them make decisions or improve customer outcomes. Firms need to be able to demonstrate what MI they have considered, where it has been discussed and challenged, what decisions and actions have been taken as a result, and how the impact of changes has been assessed to ensure they are effective in improving outcomes.
• Unclear rationale for metrics and thresholds: Firms need to be able to explain why relevant metrics have been set and why they are appropriate indicators of customer outcomes. One way might be to set these according to historic firm data or published benchmark data to identify when firms may not meet targeted good outcomes.
• Quality and granularity of MI: Vulnerability MI is sometimes aggregated rather than segmented by drivers (health, financial resilience, life events), making it harder to identify differing needs across customer groups. 

Governance, Oversight and Culture

Good Practice Identified by the FCA

• Structured governance with clear accountability: Firms that performed well have structured governance with clearly defined senior accountability, formal escalation routes and evidence that they track issues through to action. Actions presented to senior governance forums include named owners, target dates and status updates, with oversight provided through senior management and board-level reporting. 
• Board challenge leading to timely action: Customer outcomes are reported to the board throughout the year (not just annually) with appropriate MI, outcome indicators and defined tolerance levels. Board and senior management should be able to demonstrate that they question MI, understand key risks to good outcomes and the underlying root causes of issues, track specific actions and challenge how improvements are tested and evidenced. 
• Response to poor outcomes and frontline staff: Quality assurance reviews, complaints analysis and service-level MI should be used to identify where customers are not receiving expected outcomes. Corrective actions might include reopening and reassessing cases, contacting affected customers, correcting errors and making changes to processes or service delivery. They may also include addressing the drivers of any staff underperformance, setting clearer guidance and expectations, improving escalation processes and increased monitoring.
• Monitoring outsourced activities: Firms remain responsible for customer outcomes even where third parties are used. Firms can take a proportionate approach to monitoring outsourced activities, focusing their monitoring on areas that have the greatest impact on customer outcomes. Examples range from formal governance forums reviewing relevant MI (such as complaints and customer feedback), to targeted engagement with key partners about potential issues.

Areas for Improvement

• Unclear governance frameworks: FCA found it unclear in some firms how arrangements operate end-to-end, from identifying issues to testing whether actions lead to the improvement of outcomes. Firms tended to be able to describe how the framework is set up but not how it works in practice. Firms need to be able to evidence the full chain. The weakest firms stopped somewhere in the middle.
• Limited challenge from the board: Boards receive regular updates on customer outcomes but often focus on reviewing and approving reports rather than challenging them or driving further action.
• Actions taken without evidencing effectiveness: Firms are able to spot problems and take action but often there is insufficient detail on what sits behind those actions. Firms are not clearly identifying underlying drivers of issues and what actions are being taken to resolve these. 
• No reflection of culture: Many firms place a strong emphasis on culture, but the FCA found little evidence of how culture affects decision-making, how people are held accountable, or how they check if their approach is making a difference.

FCA’s Overall Message

Collecting data, listing metrics or reporting MI will not, by itself, show whether customers are receiving good outcomes. Firms should be able to explain:

1. How they have defined good outcomes across the customer journey and individual products and services.
2. What key metrics they are using to assess if those outcomes are being achieved and the rationale for these.
3. What the information tells them about the outcomes which are occurring in practice. 
4. How they use it to identify emerging risks or issues.
5. Escalation criteria and how these are implemented.
6. What steps are taken to identify underlying root causes of issues.
7. What corrective actions are taken in response and why.
8. How they ensure effective implementation of these actions and test if they lead to improved outcomes.

Firms should review the FCA’s findings against their own outcomes monitoring approach and identify possible improvements. In particular, firms should test whether interventions work and evidence improved outcomes, focusing on tangible results rather than process compliance alone.