However, it is important to note the information and insights published in these reports should be made up of data that is also being used to run the business. In other words, it should not have been shoe-horned into the report at the eleventh hour.
Most companies will have welcomed this ask — indeed, they will probably have 12 months' worth of management information and outcomes reporting data to leverage.
Companies will be clear on the benefits — in the form of efficiencies — that could be derived from producing a report made up of data already being collected and analysed to strengthen business operations and which demonstrates commitment to delivering good outcomes for consumers.
A moment of self-reflection
With the consumer duty, the FCA has highlighted the importance of learning and continuous improvement, which must be evidenced in the annual board report.
Companies should therefore be using these routine, 12-month updates as an opportunity to create a shift in the corporate mindset and a move towards the business philosophy commonly known as “kaizen” in Japanese — change is for the better.
Not only will this allow companies to move away from the “once and done” regulatory model to better align with the FCA, but it will also encourage businesses to get into the habit of routine measurement against the four consumer duty outcomes so that, when it is once again time to put pen to paper with the annual update, the data reflections and evidence of improvements that benefit customers are all there.
Learn as we go
The first consumer duty report should also serve as a good preparation tool as companies gear up for the 2025 update. After July 31, expectations for the annual reports will be set, providing companies with clarity as they gear up for the complex challenge of detailing progress (against the four consumer outcomes) with closed products.
However, learnings can also be taken from the internal experience of developing the inaugural update.
In this regard, we would encourage the senior management including the consumer duty champion to take responsibility for collating feedback, reviewing the process of building the report end to end, and agreeing a set of recommendations that can be implemented over the next 12 months.
The FCA has provided plenty of information on its reporting expectations and will no doubt provide feedback following its sample review of this first year’s annual reports.
Companies should use their own experience to build on the creative licence given by the regulator to develop a report that is outcomes focused and reflects their company, their strategic priorities and how the consumer duty applies to their business.
