Why Year Two Is Not a Repeat of Year One
Consumer Duty came into force on 31 July 2023 for new and existing products and on 31 July 2024 for closed products. The first annual board report was due 31 July 2024. That first cycle was, in practice, a build-out exercise: firms documented their processes, mapped products to outcomes, and produced a report that showed the FCA the structure was in place. The FCA's post-year-one review acknowledged that most firms passed this bar.
Year two is different. The FCA has been explicit that year-two board reports must demonstrate outcomes, not processes. The specific phrase used in the FCA's July 2025 multi-firm findings was that firms should be able to show "what has changed for customers as a result of the Duty" rather than "what the firm has done to comply with the Duty". This is a meaningful shift in what needs to appear in the board pack.
The three areas where the FCA has said year-two reports are most often falling short are: outcomes data (measurable evidence of customer benefit or harm avoided), price and value assessments (where firms are still relying on year-one benchmarking rather than refreshed 2026 pricing analysis), and vulnerable customer identification (where firms have policy but limited data on whether the policy is being applied at the front line).
The Four Outcomes: What Year Two Evidence Looks Like
The Duty structures itself around four consumer outcomes: products and services, price and value, consumer understanding, and consumer support. Each requires distinct evidence in the year-two report.
Products and Services
Year-one asked whether product governance identified target markets and reasonable expectations. Year two asks whether the product actually met those expectations and how you know. The evidence expected includes distribution channel outcomes data (are customers acquired through channel A more likely to churn, complain, or experience friction than channel B?), product performance against the target market's stated needs, and a specific "products under review" list with a stated conclusion for each.
Price and Value
The area most firms are least prepared for in year two. The FCA has clarified that price and value assessments are dynamic and must be revisited in the current environment, not carried forward from year-one benchmarking. For 2026, this means addressing the impact of BoE rate cuts on savings product margins, the appropriateness of fee levels relative to the current cost base, and any cross-subsidy that may have emerged between customer segments.
Consumer Understanding
Year-two evidence needs to move beyond disclosure inventories to measured comprehension. Firms that ran comprehension testing in year one should refresh it; firms that did not should conduct at least a light-touch test on their most complex product. Complaints data broken down by product complexity is a useful proxy: a spike in complaints referencing understanding is a signal the Duty is not being met.
Consumer Support
Support outcomes are typically the easiest to evidence because operational teams already collect the data. What year two adds is the requirement to show that the support experience does not itself create foreseeable harm: that vulnerable customers are being identified through the support channels, that unresolved queries are being escalated rather than closed, and that support wait times are proportionate to the complexity of the query. Contact-centre metrics feed directly into this outcome.
The Pieces the CFO Owns
Consumer Duty is a firm-wide programme, typically owned by a Consumer Duty Officer or Head of Compliance. But three of the deliverables are effectively CFO deliverables regardless of the org chart.
The Price and Value Assessment
Price and value is a financial exercise. The methodology requires unit-economic analysis of each product: cost to serve, revenue per customer, margin, benchmark comparison. The finance team has this data; the compliance team typically does not. In practice, if the CFO does not own the price-and-value assessment, it will be under-evidenced and the year-two report will suffer.
The Governance Line in the Board Report
The board report requires a governance statement — the board's attestation that management-information systems are adequate to monitor Duty outcomes on an ongoing basis. This is a CFO statement in substance because MI adequacy is a systems and reporting question. Draft this yourself; do not delegate it.
The Cost of the Duty Programme
The FCA has been explicit that the Duty is not a one-off compliance project but an ongoing operational commitment. Year two is the point at which the true run-rate cost of the Duty becomes visible: incremental headcount, systems, external audit, board time. Track this. When the FCA next reviews the sector, cost of compliance will be a data point they ask for.
The 60-Day Sprint Plan
From 20 May to 25 July, treating the week of 27 July as chair review and final sign-off. Days below are working days.
"The year-two board report is not asking whether the Duty is in place. It is asking what has changed for customers because of it. If you cannot answer that question with data, the report will not stand up to a supervisory review — regardless of how carefully the year-one processes were documented."
What the FCA Year-Two Lens Looks For
The FCA's 2025 multi-firm findings and its year-two supervisory guidance signal what a good year-two report contains. Six specific expectations recur.
- Refreshed price and value analysis, not year-one carry-forward. Firms that produced identical assessments in year one and year two are being flagged.
- Outcomes data with year-on-year comparability. The FCA wants to see the movement in outcome metrics between year one and year two, not standalone snapshots.
- Vulnerable customer identification rates supported by specific data. A statement that "we identify vulnerable customers" without a percentage or count is inadequate.
- Specific actions taken in response to MI signals. At least three concrete examples in the twelve-month period.
- Complaints trend analysis broken by outcome category. Not aggregate complaints; complaints tagged to which of the four outcomes they relate to.
- A stated view on where residual Duty risk remains. Honesty about what has not yet been resolved is valued more highly than an assertion of full compliance.
Key Takeaways
- The year-two board report is due 31 July 2026. Starting the sprint on 20 May allows sign-off by 25 July with time for chair review.
- Year two demands outcomes evidence, not process documentation. The lens has shifted from "what have we done" to "what has changed for customers".
- Price and value assessment is a CFO deliverable in substance regardless of the org chart. It must be refreshed for the 2026 environment, not carried forward from year one.
- The governance and MI statement in the board report is the CFO's to draft. Cite specific actions MI has driven; assertions without evidence will not stand.
- Vulnerable customer identification rates, comprehension test results, and complaints tagged by outcome category are three specific data points the FCA year-two lens looks for.
- An honest statement of residual risk is valued more highly than an assertion of full compliance. Do not overclaim.
- The first year-one enforcement outcomes are expected in H2 2026. The year-two report will be a primary evidence source in any supervisory action, so treat it as consequential documentation, not procedural filler.