Consumer Duty for insurers: strengthening oversight of customer outcomes
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The FCA is moving beyond “Have you implemented Consumer Duty?” towards assessing “How do you know customers are getting good outcomes in practice?”
This shift focuses on clear evidence, strong governance, and the ability to spot emerging issues early, particularly where the potential for harm develops gradually or only applies to specific customer cohorts.
This note summarises key messages from the FCA’s recent Consumer Duty and conduct communications for insurers. It highlights what the FCA is prioritising and the practical implications for boards and senior management. We cover:
- The key themes from recent FCA publications and supervisory commentary
- Fair value and other outcome areas that continue to attract scrutiny
- Common gaps in management information and governance arrangements
- How firms can strengthen outcomes monitoring, including the use of analytics and AI to spot trends and emerging risks across operational and customer metrics
- Board questions to help focus discussion and prioritise next steps
We help insurers to translate regulatory expectations into practical, proportionate actions; from reviewing Consumer Duty evidence packs and fair value frameworks to strengthening outcomes-related management information (MI), governance and assurance.
The FCA is clear that Consumer Duty is now focused on evidence of customer outcomes in practice, not just frameworks or sign-off. Insurers are expected to demonstrate how monitoring, governance, and data-driven insights deliver good outcomes for customers. This expectation is reflected across several FCA publications:
- Finalised Guidance on the Consumer Duty (FG22/5) – setting out expectations on monitoring and evidencing outcomes.
- Consumer Duty implementation: good practice and areas for improvement – what supervisors are seeing across firms.
- Consumer Duty: findings from our review of fair value frameworks and Price and Value outcome: good and poor practice update – clearer expectations on how firms should evidence fair value using data that drives decisions.
- Firms’ treatment of customers in vulnerable circumstances / Delivering good outcomes for customers in vulnerable circumstances – continued focus on differential outcomes and whether MI supports effective oversight.
For recent evidence of additional scrutiny, see the FCA’s statement on expanding its insurance work in response to the Which? super-complaint, and the accompanying response document. The super-complaint alleged systemic poor outcomes in certain home and travel insurance markets, particularly around claims handling and policy transparency.
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Practical implications for insurers
The FCA’s recent communications translate into some clear practical expectations for insurers:
- Monitoring needs to be ongoing: Periodic or retrospective reviews are unlikely to be sufficient on their own. Firms are expected to understand how outcomes are developing over time.
- Portfolio averages can hide issues: Firms should be able to see where outcomes differ by product, customer cohort, tenure, channel or vulnerability.
- MI should inform decisions: Supervisors are looking for evidence that data leads to action on product changes, pricing decisions, or targeted customer interventions.
- Boards need clear sight of outcomes: Boards and senior management should be able to explain how outcome monitoring, escalation and challenge work together in practice.
- Early warning is critical: Identifying emerging issues early is increasingly important, particularly where harm may be developing gradually.
These expectations are most visible in the FCA’s continued focus on fair value and pricing practices, which remains a key area of supervisory scrutiny for insurers.
Fair value and pricing under Consumer Duty
The FCA has been explicit that the price and value outcome is one of the clearest tests of whether Consumer Duty is delivering meaningful change for customers.
For insurers, this has translated into sustained focus on pricing practices, product design and outcomes for different groups of policyholders. across different policyholder groups.
While most firms have completed fair value assessments, many have struggled to demonstrate how those assessments are used to inform decisions in practice. Weaknesses are most visible where analysis relies heavily on high-level or retrospective metrics, or where assessments do not clearly influence pricing, product changes or customer interventions.
It is also important to embed fair value as part of ongoing governance rather than treating it as a periodic exercise.
The FCA expects firms to be able to explain how value is monitored over time, how differences in outcomes across cohorts are identified, and how issues are escalated and addressed.
The Which? super-complaint has added further momentum, with increased scrutiny expected of whether insurance markets are delivering fair outcomes in practice; including through claims handling, customer support and policy clarity, particularly where poorer outcomes can emerge gradually.
The FCA’s focus is no longer on whether firms have completed fair value assessments, but on whether those assessments genuinely inform decisions, highlight emerging risks, and lead to timely action where outcomes are deteriorating. As a result, the ability to monitor value over time, and to understand how outcomes differ across products and customer groups, is becoming just as important as the assessment itself.
Ed Harrison Partner
How insurers can continuously monitor customer outcomes
A recurring theme in the FCA commentary is that periodic reviews and static assessments are no longer sufficient on their own.
For insurers, this creates a practical challenge, because many of the metrics used to evidence Consumer Duty (such as claims performance, complaints, or measures of value) are backward-looking and reviewed infrequently.
As a result, emerging issues may only become visible once customer harm has already crystallised.
Against this backdrop, there is growing interest in approaches that support ongoing monitoring of outcomes, helping firms to:
- identify changes in direction, not just absolute performance
- spot gradual deterioration that may not breach existing thresholds
- understand how outcomes differ across products, cohorts or customer groups
- support earlier escalation and management action
This shift aligns closely with the FCA’s expectation that firms should be able to explain how they know outcomes are developing over time, and what triggers intervention before issues become widespread.
The challenge is not about measuring outcomes once a year, but knowing when something is starting to change. As regulatory focus moves towards outcomes in practice, firms should ensure they can demonstrate that they can detect emerging issues early, understand who is affected, and act before poor outcomes become entrenched.
Cat Drummond Partner
What this means in practice
Under Consumer Duty, firms are expected to monitor a broad range of indicators that reflect customer experience and outcomes, not just technical performance.
In practice, this means looking beyond single metrics and focusing on how outcomes are changing over time. Examples of outcome-focused metrics insurers are increasingly considering include:
- Claims outcomes: Speed of settlement and payment (including the proportion of claims taking significantly longer to resolve), acceptance rates, and outcomes by product or customer cohort.
- Complaints and customer support: Volumes and themes, escalation rates, time to resolution, and repeat complaints that point to unresolved root causes.
- Value and pricing indicators: Loss ratios and margins by tenure, channel or product feature, and how these evolve over time rather than at a single point.
- Customer journey friction: Drop-out rates, delays, or repeated contacts that may indicate confusion or poor consumer support.
- Vulnerable customer outcomes: Differences in experience or outcomes compared with non-vulnerable customers, and whether gaps are widening or narrowing.
The key question is not only whether these metrics are within tolerance today, but whether trends show outcomes improving or deteriorating, and whether this triggers timely challenge and action.
Our recommendations for strengthening Consumer Duty oversight
Firms should consider how their Consumer Duty monitoring can move beyond periodic review towards more continuous oversight of outcomes, particularly in areas where harm can develop gradually or affect specific customer groups.
In practice, this means:
- strengthening the ability to spot trends and changes in direction across outcomes and operational metrics
- looking beyond averages to understand how outcomes differ by product, cohort or customer type
- ensuring insights are clearly linked to escalation, challenge and management action
Approaches that combine data, analytics and automation can help support this in a proportionate way, while giving boards greater confidence that customer outcomes are being overseen effectively in practice.
Questions boards should be asking
Consumer Duty places clear expectations on boards and senior management to oversee customer outcomes in practice. Boards are expected to be able to explain not just what is monitored, but how that monitoring leads to challenge and action.
Questions boards may wish to consider include:
- How confident are we that we would identify a deterioration in customer outcomes early?
- Which outcomes present the greatest conduct risk for our business, and why?
- Where are we relying on averages that could mask poorer outcomes for specific customer groups?
- What triggers escalation or intervention, and are those triggers forward-looking?
- How do we evidence that insights from monitoring lead to changes in pricing, products or customer support?
- Would we be comfortable explaining our approach to outcomes monitoring to the FCA today?
These questions can help boards assess whether their current arrangements provide sufficient assurance that Consumer Duty is working in practice, and where further focus may be needed.
The key question for boards is whether they have sufficient insight to know how customer outcomes are evolving in practice. That means being confident not just in what is monitored today, but in how emerging issues would be identified early, how differences in outcomes across customer groups are understood, and how monitoring leads to timely challenge and action.
Charl Cronje Partner
How LCP can support Consumer Duty implementation
We can help you respond to evolving FCA expectations in a practical and proportionate way and give your board confidence that Consumer Duty is working in practice. In particular, we can help you:
- strengthen outcomes monitoring using data, analytics and AI, moving beyond periodic reviews towards more continuous oversight
- use analytics to identify trends, changes in direction and emerging risks across customer outcomes and operational metrics
- design MI that supports earlier escalation, clearer challenge and timely management action, rather than retrospective reporting
This includes helping firms to think carefully about where more automated, analytics-led approaches can add value: for example, in monitoring claims performance, complaints, value indicators and customer journeys over time.
Please get in touch if you would like to discuss further how these approaches could support your Consumer Duty governance.
