The FCA’s Consumer Duty requires firms to take “reasonable steps” to deliver good outcomes for customers. Most firms believe they meet that standard. The challenge is that the FCA’s interpretation of what is “reasonable” has evolved significantly since the Duty came into force in July 2023.
During initial implementation, many firms approached Consumer Duty as a documentation exercise. Policies were updated, staff were trained, samples of interactions were reviewed, and board reports were produced. That was enough to meet the first deadline. It is no longer sufficient.
The FCA has made clear that compliance must now be evidenced through data, not just process. Firms need to demonstrate good outcomes across their entire customer base, not just a small QA sample. They must do so consistently, with audit trails that stand up to regulatory scrutiny.
This shift requires firms to move from process-led compliance to outcome-led evidence at scale.
What the FCA means by ‘Reasonable Steps’
In practice, “reasonable steps” now means being able to demonstrate that you have identified, monitored, and acted on customer outcomes across all four Consumer Duty pillars: products and services, price and value, consumer understanding, and consumer support.
The key word is “evidence.” The FCA expects board reports to include clear monitoring results, identification of poor outcomes (including whether particular customer groups are affected), and details of actions taken. Simply showing that a process exists or has been completed is not enough.
A QA framework, for example, is necessary—but insufficient on its own. The regulator wants to see what that framework reveals, what conclusions are drawn, and how the firm responds. Evidence must link directly to outcomes and decision-making.
The Structural Evidence Gap
For many firms, the gap is not about intent but design. Existing QA and compliance frameworks were built for a different regulatory environment—one where sampling, complaint volumes, and process adherence were acceptable proxies for quality.
Without outcome-specific data, firms produce reports that appear complete but lack depth
Consumer Duty raises the bar. Firms must evidence outcomes across their full customer base, with clear thresholds, tolerances, and links to remedial action. In practice, most firms fall short in four key areas.
Coverage
Manual QA typically reviews 2%–5% of customer interactions. That leaves the vast majority unexamined. Under Consumer Duty, firms are expected to demonstrate outcomes across all customers—not infer them from a small sample.
This creates a fundamental problem: assumptions are being used where evidence is required. Given the scale of most operations, increasing manual coverage meaningfully is rarely feasible.
Consistency
Manual QA is inherently subjective. Different reviewers often reach different conclusions on the same interaction, particularly around risk severity or outcome quality. Across large teams or adviser networks, this leads to inconsistent measurement and weakens the credibility of reported outcomes.
Consistency is critical when evidence is presented to the FCA. Variation undermines confidence in the data.
Specificity
Many firms rely on repurposed management information (MI) that was not designed for Consumer Duty. The FCA has explicitly warned against this. Data must be tailored to understanding outcomes—not just activity.
Without outcome-specific data, firms produce reports that appear complete but lack depth. Compliance teams are often forced to retrofit existing data into new frameworks, creating a disconnect between reporting and reality.
Timeliness
Manual QA operates with a lag. Reviews may take place weeks or months after interactions occur. By the time issues are identified, harm may already have happened.
The FCA expects proactive oversight. Retrospective insight alone demonstrates what went wrong—it does not demonstrate control.
Why sampling now creates regulatory risk
Sampling has long been the backbone of QA in financial services. However, under Consumer Duty, its limitations create material regulatory risk.
A small sample offers limited visibility. If only 2% of interactions are reviewed, 98% remain unassessed. Any assurance drawn from that sample is inherently uncertain.
Sampling also introduces selection bias. Whether random or criteria-based, it rarely captures the highest-risk interactions reliably. This weakens a firm’s ability to identify emerging issues.
Most importantly, sampling delays response. By the time patterns are identified, multiple customers may already have experienced poor outcomes. This reactive model conflicts directly with the FCA’s expectation of early intervention.
For QA teams, the issue is not awareness but capacity. Increasing sample sizes requires significant additional resource without resolving the underlying limitations of the approach.
Moving to systematic evidence
Delivering full coverage through manual review is not practical. As a result, technology is becoming central to evidencing Consumer Duty at scale.
AI-driven monitoring platforms can analyse every customer interaction—across calls, meetings, and written communications—identifying conduct risk, vulnerability indicators, and outcome-related issues in real time or retrospectively.
Several capabilities are essential in this context:
- Full interaction coverage: Evidence must span all customer touchpoints, not just selected channels.
- Real-time and retrospective insight: Retrospective analysis supports reporting and audit; real-time monitoring enables early intervention.
- Outcome-specific assessment: Monitoring must align directly to the four Consumer Duty outcomes, not rely on generic metrics like sentiment.
- Traceable evidence: Each flagged issue should link back to the original interaction, the identified risk, and the action taken—creating a clear audit trail.
- Workflow integration: Evidence should feed into existing governance, QA, and board reporting structures to support decision-making.
Technology does not replace oversight—it enables it at the scale now expected by the regulator.
Building a scalable evidence framework
The FCA has signalled that expectations will continue to rise, with increased scrutiny through multi-firm reviews and enhanced reporting requirements. Firms that continue to rely on sampling and manual processes face growing risk.
Transitioning to a scalable evidence framework requires planning and investment, but the starting point is clear: understand where current evidence falls short and begin closing the gaps.
Three practical steps can help:
- Assess your evidence gaps
Map current monitoring against the four Consumer Duty outcomes. Identify weaknesses in coverage, consistency, specificity, and timeliness. - Explore technology-enabled monitoring
Evaluate how automated analysis can deliver full coverage and outcome-specific insight across your customer interactions. - Build a clear business case
Quantify the cost, efficiency gains, and risk reduction of moving from sample-based QA to systematic, data-driven evidence.
‘Reasonable steps’ now means being able to prove—consistently and at scale—that good outcomes are being delivered. For most firms, that requires a fundamental shift in how evidence is generated, measured, and used.
