The FCA relax Consumer Duty Board champion requirements, but the Duty remains central to FCA strategy

In the Financial Conduct Authority’s latest update announced on February 27, 2025, the FCA has removed the expectation for firms to have a designated Consumer Duty champion at Board level. 

This change, effective immediately, provides firms with greater flexibility in their governance arrangements while maintaining the focus on consumer outcomes.

The FCA stated that the Consumer Duty, which came into force for open products and services on July 31, 2023, and for closed products and services on July 31, 2024, should now be well-embedded in firms' management discussions, processes, and policies. 

While firms are no longer required to have a Duty champion, they can retain the role if they wish to do so.

This development comes as part of the FCA's ongoing efforts to refine and streamline regulatory requirements. However, it's important to note that the fundamental expectations regarding Consumer Duty compliance remain unchanged. Firms are still expected to ensure that the Duty is regularly discussed and considered in all relevant decision-making processes.

Key takeaways from the FCA’s Consumer Duty Board report reviews

On the topic of Consumer Duty and Board responsibilities, the FCA's review of the first Consumer Duty board reports has revealed both progress and areas for improvement across the financial services industry.

The FCA’s review of these reports emphasises the importance of strong governance, customer understanding, and proactive monitoring to improve consumer outcomes.

Findings indicate that many firms, including smaller lenders, must enhance their oversight, ensure board reports contain actionable insights, and develop better methods for assessing customer needs.

However, for many firms, the process of producing their inaugural Consumer Duty Board report was challenging due to the lack of precedent to be able to follow. 

While some smaller firms were praised for their innovative approaches, such as utilising real-time missed payment data for early intervention and tailoring services for vulnerable customers, others struggled with data specificity, insufficient focus on vulnerable consumers, and a reactive approach to risk identification. 

The FCA acknowledged that resource constraints might impact full implementation, especially for smaller firms, but maintained its expectation for all entities to take proportionate and practical steps towards compliance. 

We have no doubt that as firms get more familiar with the production of these reports, the value and actionable insights they produce for their own business, the FCA and the broader industry will only strengthen.

Consumer Duty in the FCA's future strategy

Despite their first relaxation in requirements, the FCA has reaffirmed that Consumer Duty will play a central role in its upcoming five-year strategy, set to be released in spring of this year. 

This underscores the regulator's continued commitment to promoting fair consumer outcomes and maintaining high standards in the financial services industry.

The FCA's focus on Consumer Duty is evident in its recently outlined priorities for 2024/25, which include:

Embedding Consumer Duty and raising standards: The FCA plans to assess how firms across various sectors are implementing and complying with the Duty.

Enhancing understanding of price and value outcomes: This involves ensuring firms use robust analysis to assure themselves and the FCA that they are offering fair value to consumers.

Sector-specific priorities: The FCA will focus on areas of concern across retail banking, consumer finance, payments and digital assets, consumer investments, and insurance.

Realising the benefits of Consumer Duty: The regulator aims to simplify requirements on retail firms where possible, with next steps expected in the second half of 2025.

Looking ahead

While the FCA has provided firms with more flexibility regarding the Board champion role in this latest update, the importance of Consumer Duty in regulatory priorities remains unchanged.

The Board champion role may no longer be mandatory, but companies may find value in retaining this position to drive ongoing Consumer Duty compliance and champion cultural change.

The FCA's upcoming five-year strategy is expected to provide further clarity on the regulator's long-term vision for Consumer Duty and its role in shaping the financial services landscape.

As the financial services sector continues to evolve, maintaining a strong focus on consumer outcomes will be crucial for firms looking to thrive in this dynamic regulatory environment.