How Non-Executive Directors Should Oversee Consumer Duty

By Adrian Lawrence FCA, founder of NED Capital · Part of the Board Governance Hub

The Consumer Duty is one of the most significant regulatory developments to reach UK financial services boards in years, and it is unusual in how directly it reaches the boardroom. Most regulation is implemented by management and merely reported to the board; the Duty names the board itself. It requires the board of a regulated firm to assess, and to sign off, whether the firm is delivering good outcomes for its customers — and it expects non-executive directors to provide independent challenge in doing so. For a non-executive, this is not a matter to be noted and passed over. It is a defined responsibility, and one the regulator will look to the board to have discharged if things go wrong.

This guide explains what the Consumer Duty asks of a board, what a non-executive director should be doing to meet it, and how to provide genuine challenge rather than a rubber stamp. It is written for board members of firms within the Duty’s scope and those advising them, and it draws on the governance work of NED Capital and the regulatory expertise of our sister practice. Every NED Capital search is led personally by Adrian Lawrence FCA.

What the Consumer Duty Asks of a Board

The Consumer Duty, introduced by the Financial Conduct Authority, sets a higher standard of consumer protection across retail financial services. At its heart is a requirement that firms deliver good outcomes for customers — across products and services, price and value, consumer understanding, and consumer support. What makes it distinctive from a governance point of view is the role it gives the board. Firms are expected to produce an annual assessment of whether they are delivering good outcomes, and the board is expected to review and approve that assessment, satisfy itself that the firm is complying with the Duty, and agree any action needed. The board is also expected to appoint a non-executive — often called the Consumer Duty champion — to help ensure the Duty is discussed regularly and robustly at board level. In short, the Duty hard-wires customer outcomes into the board’s agenda and makes the board accountable for them. A non-executive therefore cannot treat the Duty as an operational matter handled below board level; it is squarely the board’s business.

The Annual Board Report on Outcomes

The centrepiece of the board’s role is the annual assessment of whether the firm is delivering good outcomes for customers. This is not a compliance tick-box: it is meant to be a genuine, evidence-based evaluation that the board reviews, challenges and approves. For a non-executive, the quality of this report is the single most important thing to scrutinise. A good report is built on real data — outcomes testing, complaints analysis, evidence of value, measures of whether customers understand what they are buying — and it is honest about where outcomes are falling short. A weak report asserts that outcomes are good without the evidence to support it, or buries problems in reassuring language. A non-executive should approach the annual assessment as the board’s chance to test whether the firm genuinely knows how its customers are faring, and should be willing to send it back if the evidence is not there. Approving an assessment that later proves hollow is precisely the failure of oversight the Duty is designed to prevent, and the board’s approval is on the record.

From Process to Outcomes

The deepest change the Duty brings is a shift from process to outcomes, and it is one a non-executive must internalise. Under older conduct rules, a firm could often demonstrate compliance by showing that the right process had been followed — the disclosure was given, the box was ticked, the procedure was observed. The Duty asks a harder question: regardless of the process, did the customer actually get a good outcome. A sale can be procedurally perfect and still leave a customer in an unsuitable product; a communication can meet every disclosure requirement and still leave the customer not understanding what they bought. For the board, this means the evidence it relies on must test outcomes, not just procedures — and the firm’s compliance monitoring must have made the same shift. A non-executive should be asking whether the assurance reaching the board genuinely measures what happened to customers, or merely confirms that processes were followed. This connects directly to the firm’s monitoring programme, which we examine in our guide to what NEDs need to know about compliance monitoring.

Where the Accountability Sits

An important question for any board is how the Duty maps onto individual accountability under the Senior Managers & Certification Regime. The Duty does not replace the SMCR; it works alongside it, and responsibility for the firm’s compliance with the Duty will sit with named senior managers whose roles touch the relevant outcomes. The board’s collective responsibility and the non-executive challenge role sit above that, and the Consumer Duty champion — usually an independent non-executive — has a specific part to play in keeping the Duty live at board level. A non-executive should understand how accountability is allocated in their own firm: who owns each of the four outcomes, how that maps to senior-manager responsibilities, and whether the allocation is clear or blurred. Blurred accountability is a governance weakness in its own right. Our sister practice sets this out clearly in its analysis of Consumer Duty and the SMF framework, and in its guide to the Consumer Duty board champion role — both worth reading alongside this for the senior-manager perspective.

Providing Genuine Challenge

The Duty expects non-executives to challenge, and challenge is only real if the board is equipped and willing to do it. For a non-executive, that means a few things in practice. It means insisting on evidence rather than assurance — data on outcomes, not management’s confidence that outcomes are fine. It means asking about the customers who are faring worst, including those in vulnerable circumstances, rather than being shown the average. It means probing price and value honestly, which can be uncomfortable where the firm’s margins depend on the answer. It means checking that the firm is acting on what it finds, not just measuring. And it means being prepared to withhold approval of the annual assessment if the evidence does not support it. Providing this challenge is the substance of the non-executive role under the Duty, and a board that treats the annual assessment as a formality to be approved is not discharging it. The right non-executive — one with the regulatory understanding and the independence to ask hard questions — is what makes the difference, which is the heart of what we do in FCA-regulated board governance.

Frequently Asked Questions

Does the Consumer Duty really involve the board directly?

Yes. Unusually for conduct regulation, the Duty names the board: it must review and approve an annual assessment of customer outcomes, satisfy itself the firm complies, and typically appoint a non-executive Consumer Duty champion. It is squarely a board responsibility, not an operational one.

What is the Consumer Duty champion?

It is the independent non-executive the board appoints to help ensure the Duty is discussed regularly and robustly at board level. The champion does not carry sole responsibility — that remains collective and sits with named senior managers — but keeps the Duty live in the boardroom.

What should a NED look for in the annual outcomes assessment?

Real, outcome-based evidence — outcomes testing, complaints analysis, value assessments, measures of customer understanding — and honesty about where outcomes fall short. A report that asserts good outcomes without the data behind it should be challenged and, if necessary, sent back.

How does the Duty relate to the SMCR?

It works alongside it. Responsibility for the firm’s compliance with the Duty sits with named senior managers under the SMCR, with the board’s collective responsibility and non-executive challenge above that. A NED should understand exactly how the four outcomes map onto senior-manager accountability in their firm.

NED Capital | Sister practice of FD Capital and SMF Capital | ICAEW practising certificate held by Adrian Lawrence FCA.