Consumer Duty entered financial services as a regulatory requirement, yet the next phase will be defined by the business decisions it produces.
The FCA’s recent work on consumer understanding and Year 2 board reporting points towards a higher standard, under which firms must show that customers understood what they bought, received fair value and experienced appropriate treatment across the distribution chain.
Frameworks, reporting packs and low complaint volumes contribute to that assessment, although the regulator now expects boards to draw conclusions from the evidence and explain what changed as a result.
This places greater weight on judgement than implementation. Firms have spent considerable time building fair value assessments, governance structures, training programmes and management information, all of which created the foundation for oversight.
The challenge now lies in using that infrastructure to identify where products, customer journeys and distribution models need to change, which takes Consumer Duty beyond a narrow compliance mandate and into decisions that shape how the business competes.
Outcomes data has a wider commercial use
Complaints, vulnerability indicators, cancellation patterns and measures of customer understanding each reveal a different part of the customer experience. Considered together, they can show where a product creates confusion, where its intended market has been defined too widely or where outcomes deteriorate after an intermediary becomes involved.
They can also identify which propositions work well, which groups receive consistent outcomes and where further investment may produce a measurable return.
The same evidence can therefore support regulatory oversight and commercial planning, although each function will approach it from a different perspective.
Compliance teams need to assess whether the conclusions are credible, whether foreseeable harm has been identified and whether the firm can defend its decisions under scrutiny. Product, Operations and Commercial leaders need to decide how those findings should influence pricing, design, customer support and distribution.
A pattern in outcomes data may reveal that customers misunderstand a product feature, but the response requires more than a control review. The firm may need to rewrite communications, redesign the feature, narrow the target market or invest in additional support. Each option carries cost, customer and revenue implications, which means the quality of the final decision depends on regulatory understanding and commercial judgement working together.
The FCA’s wider agenda reinforces this connection. Consumer protection sits alongside commitments concerning competition, investment and growth, which gives firms a clear reason to treat customer outcomes as a source of business intelligence. Organisations that use the Duty only to satisfy reporting requirements may meet the formal standard while overlooking information that could improve their proposition and strengthen customer trust.
Executive responsibility is becoming more connected
Compliance or Risk became the natural home for Consumer Duty during implementation because those functions had the experience to interpret the rules, build controls and establish an evidence trail.
That structure still has a clear purpose, as independent challenge and credible governance will remain central to the FCA’s assessment of how firms treat customers.
The next stage requires a broader operating model because the decisions prompted by Consumer Duty data sit across the organisation. Product teams determine whether a proposition needs redesign, Operations leaders influence the experience customers receive after purchase, and Distribution teams decide how products reach the people they were built to serve.
Commercial leaders then make choices about investment, pricing and customer segments, all of which can affect the outcomes firms are expected to monitor.
This creates a need for clearer connections between functions rather than a transfer of responsibility from one team to another.
Compliance should retain oversight and test whether management’s conclusions are supported by evidence, while commercial and operational leaders should own the decisions that follow. Boards then need to assess whether those decisions produced the intended result and whether further action is required.
The model works when each function understands its role and works from the same information. Consumer Duty data loses much of its use when it stays inside a regulatory reporting process, while commercial teams risk weak decisions when they interpret the evidence without enough understanding of the obligations behind it.
Shared data, clear accountability and credible challenge allow firms to protect governance while making fuller use of what the information reveals.
Board capability may be lagging behind the requirement
This development also raises a question about whether board and executive skills have kept pace with the work. Many firms have reviewed their skills matrices in response to developments in regulation, technology and customer behaviour, yet Consumer Duty capability may still sit within a broad category of compliance knowledge.
That treatment can conceal a more specific gap because familiarity with the rules does not always translate into an ability to connect customer evidence with product and distribution decisions. Experienced commercial leaders may understand customer behaviour and revenue models while lacking the regulatory fluency required to assess fair value, foreseeable harm or the quality of customer understanding. Governance leaders may bring the opposite profile, with deep knowledge of oversight and limited experience in turning customer findings into commercial action.
The capability required in the next phase combines both areas. Boards need people who can test the strength of the evidence, understand what it says about the customer experience and judge whether management’s response addresses the underlying issue. That competence may sit with a non-executive director, an executive committee member or a senior leader with direct access to governance forums, but firms first need to identify it as a distinct requirement.
A skills matrix that records regulation, customer experience and commercial expertise as separate categories may therefore miss the importance of the relationship between them. Reviewing that interaction gives boards a clearer view of where the gap exists and whether it can be addressed through development, succession planning or an external appointment.
The hiring brief needs greater precision
The talent market reflects the same divide. Consumer Duty specialists often come from Compliance, Conduct Risk or Governance, bringing strong experience in regulatory interpretation, reporting and challenge. Product and commercial leaders tend to bring deeper experience in proposition design, customer segmentation and distribution, while fewer candidates have built careers across both disciplines.
This makes the design of the role as important as the search. A request for a Consumer Duty lead could describe someone responsible for board reporting and assurance, or it could refer to a leader expected to reshape products and influence commercial priorities. Those mandates require different backgrounds, reporting lines and levels of authority, even when they carry the same title.
Hiring managers should therefore begin with the decisions attached to the position. A governance-led role needs credibility with Compliance, Risk and the board, while a commercially focused appointment needs influence across Product, Operations and Distribution. A hybrid mandate requires enough seniority to challenge both sides and a remit clear enough to prevent the role from becoming a reporting function with responsibility that extends beyond its authority.
The strongest candidates can interpret outcomes data in context, understand the regulatory expectations behind it and convert those findings into clear recommendations. They can identify when a pattern points to customer harm, when a product needs redesign and when the evidence supports further investment. That combination is scarce, which is likely to make these appointments harder as firms move deeper into outcomes-based supervision.
Consumer Duty will now be tested through the quality of the decisions it informs. Firms still need strong governance, clear evidence and independent oversight, but those foundations have greater use when they shape products, customer journeys and commercial priorities. The leadership challenge is to connect regulatory fluency with business judgement so that both influence the same decisions.
For firms reviewing board or executive capability, Declan Stark can provide market mapping and insight into the profiles that combine Consumer Duty knowledge with product, operational and commercial experience. Contact Declan directly for a confidential conversation.