Consumer Duty · Annual reporting

The Consumer Duty year-two board report — what year two should show

Reviewed by Matthew Bartlett, Director, Apex Insurance Brokers Limited (FCA FRN 724952) · Published 14 July 2026

Every FCA-authorised firm distributing retail products must produce an annual Consumer Duty board (or equivalent) report by 31 July each year. Year-two reports (July 2025 onward) face materially higher expectations than year-one baseline. This page maps the requirements and the PI-adjacent implications.

The year-two step-up

  1. Year-one baseline (July 2024). Firms established implementation, described processes, initial outcomes evidence.
  2. Year-two (July 2025). Firms expected to show measurable client-outcome improvement, address year-one shortfalls, and demonstrate evolved processes.
  3. Year-three (July 2026). Continuing improvement plus response to FCA multi-firm findings and thematic reviews.

Content the year-two report should address

  1. Products and services outcomes. Evidence of target-market fit, product-oversight distribution (POG) records, target-market reviews.
  2. Price and value outcomes. Fair-value assessments across product ranges, distribution-cost transparency, ongoing-service delivery.
  3. Consumer understanding outcomes. Comprehension testing, disclosure quality, complex-product communication.
  4. Consumer support outcomes. Complaint volumes and outcomes, vulnerable-customer identification, service-level delivery.
  5. Cross-cutting improvements. Good-faith behaviours, foreseeable-harm avoidance, enabling customers to pursue objectives.

Board or governing body engagement

  1. Documented board discussion of the report content.
  2. Board minutes recording the review.
  3. Consumer Duty champion engagement in the process.
  4. Board sign-off attesting to Consumer Duty compliance.
  5. Action plan for identified issues.

PI-adjacent implications

  1. Insurers ask about Consumer Duty implementation at PI renewal. A robust year-two report supports the underwriting position.
  2. Board report may become evidence in claims. Where a client claims Consumer Duty failure caused loss, the firm's board report is a natural evidential document.
  3. Fair-value assessment records support the firm's defence against Consumer-Duty-related claims.
  4. Vulnerable-customer register and adjustment records provide evidence of consumer-support outcome delivery.

Common year-two gaps

  1. Missing improvement evidence. Report describes processes but doesn't show year-on-year improvement.
  2. Weak fair-value assessment. Product-level review absent or superficial.
  3. Vulnerable-customer identification patchy.
  4. Board engagement documented but not substantive.
  5. Complaint pattern analysis absent despite volume changes.
  6. Distribution-cost transparency not addressed at group level.

Getting year-two right

  1. Start preparation early — typically Q1 for July filing.
  2. Engage the compliance function and product teams.
  3. Document specific improvements from year one.
  4. Address any FCA multi-firm findings applicable to the firm.
  5. Include forward-looking commitments for year three.
  6. Retain the underlying evidence base for potential regulator or claim inquiry.

Frequently asked

What is the Consumer Duty annual board report?
Under PRIN 2A, FCA-authorised firms distributing retail products must produce an annual board (or equivalent) report assessing Consumer Duty compliance and outcomes. Due 31 July each year.
Does the FCA see the report automatically?
No. The FCA can request the report at any time but doesn't receive it as a matter of course. Firms retain it as evidence of compliance.
What if my year-two report shows similar content to year one?
FCA and insurer expectations both include evidence of year-on-year improvement. A static year-two report typically indicates weak implementation and attracts scrutiny.
How does the board report affect PI insurance?
Materially. PI insurers now routinely ask about Consumer Duty implementation. A robust year-two report supports underwriting position. Absence of documented implementation attracts higher rating.
Who signs off the report?
Board or equivalent governing body. In smaller firms without a board, senior management under SMCR carries the sign-off responsibility.
What if we're an appointed representative — does the principal's report cover us?
Principal firm's Consumer Duty framework applies to AR activity. AR firms typically don't produce separate reports but contribute to the principal's framework.
Is the report confidential?
Not automatically. Where the firm choses to share it (e.g., with insurers, auditors), confidentiality can be preserved by agreement. FCA-requested reports subject to standard FCA confidentiality.
What about small firms with minimal board structure?
Same substantive requirement. Small firms typically document via directors' meeting minutes or an equivalent governance process. Substance matters more than formal structure.

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