“The best reports were structured in a way that made them easy for boards to scrutinise the key elements required by [PRIN 2A.8]”.

Structure your report to ensure that it covers all the requirements of PRIN 2A.8.3R and facilitates capturing the review, decisions and approvals required under PRIN 2A.8.4- 5R.

The report should cover customer outcomes, compliance and strategic alignment with the Duty. You also need to capture approval of the report, actions to address identified risks and/or instances of poor outcomes and any required changes to the firm’s business strategy to ensure ongoing compliance with the Duty.

Start simple and build from there. Jumping straight into data can mean you get lost in the detail. Consider using R.A.G. ratings or some similar visual means of highlighting areas of elevated risk or issues.

A clearly documented process for report production with roles, responsibilities, inputs and approvals can help manage and coordinate preparation of the report and demonstrate good governance.

It also guards against key person risk if your business relies on a limited number of subject matter experts to develop the report.

The FCA commented on the value of gaining input from across the business, including 2LOD and 3LOD (where appropriate). Ensure record keeping requirements are clear and do not be afraid of maintaining records of version control.

Culture and conduct are a core focus of the Duty. The FCA wants to see SMFs actively leading firms by putting good customer outcomes at the heart of business decisions. Lots of firms do this but fail to capitalise on the opportunity to create an auditable paper trail.

Priming your board with a documented reminder of their duties and examples of questions, then minuting discussion and (where applicable) debate in the meeting to approve the report, makes it considerably easier to demonstrate that the right behaviors are embedded.

We are in a challenging period of significant ongoing market and economic uncertainty, with a regulatory burden that has never been higher. The report is not about perfection; it is important to recognise the areas where you have gaps and set reasonable actions to address them. Actions should have clear owners, realistic timescales and – where possible – details of how success will be measured.

Do not shy away from using the report to highlight successes but remember that a key objective is to show that management has its finger on the pulse and is taking the business in a direction which is consistent with the Duty. This only works with an honest ‘warts and all’ assessment.

Ensure that claims in the report can be objectively justified based on data. Including annexes can help to incorporate detailed reporting without losing the messaging in the body of the report. The FCA really wants to see how firms are measuring outcomes across their customer bases, so ensuring your data and reporting can be segregated by customer type (including, but not limited to, vulnerability) is important.

The report should also cover what information is being shared with other parties in the distribution chain, including if this is adequate and what it shows. Be transparent about the limitations of any data and consider showing continuous improvement through identifying reporting enhancements.

The FCA’s feedback is accessible and clear. Usefully, the regulator has addressed some comments specifically to smaller firms. If you are struggling, seek specialist support, but do not leave it too late… with everything else going on in the consumer finance sector, it is shaping up to be a busy summer!