In February 2026, to coincide with the start of the FCA’s review of firms’ approaches to monitoring consumer outcomes, Square 4 published its Outcomes Monitoring Best Practice Guide. Drawing on insights from our review of 48 Consumer Duty Board Reports, outcomes monitoring frameworks and end-to-end customer journeys across the market, the guide set out 11 practical actions to help firms benchmark and strengthen their outcomes monitoring frameworks ahead of the FCA’s review findings.
In May 2026, Square 4’s Consumer Duty research paper provided further insight, highlighting many of the practical challenges firms continue to face in embedding the Duty, particularly around evidencing good customer outcomes, strengthening board reporting, improving MI quality and identifying outcome gaps for vulnerable customers. Those findings are also consistent with the themes now reflected in the FCA’s outcomes monitoring review, including the need for firms to move beyond framework design and demonstrate how monitoring leads to better decisions and improved outcomes in practice
On 27 July 2026, the FCA published its review findings: Outcomes monitoring: good practice and areas for improvement, based on a survey of 56 firms and a detailed assessment of Board reports and information requests across strategy and framework, data and MI and governance, oversight and culture.
Taken together, the FCA’s findings, Square 4’s February 2026 Outcomes Monitoring Best Practice Guide and our May 2026 Consumer Duty Research paper point to a clear and consistent message: more mature firms are those that can define good outcomes clearly, use granular and meaningful MI, evidence how monitoring informs decisions, and show that governance arrangements are improving outcomes rather than simply overseeing reports.
Below, we revisit the practical recommendations from our Outcomes Monitoring Best Practice Guide and the insights from our Consumer Duty Research Paper, and compare them with the FCA’s observations, highlighting the actions firms can take to strengthen their approach further.
1. Defining “good” before you measure it
Key FCA observations
According to the FCA’s review, the strongest firms defined good outcomes product-by-product and stage-by-stage (covering joining, using the service and leaving) and linked those definitions directly to the customer journey, rather than relying on a single broad outcome statement. Where this was missing, firms had “high-level frameworks without clear outcome definitions” and could not consistently explain what good outcomes looked like at each stage, or how metrics evidenced them.
Our February Insights
Our first practical action in our Outcomes Monitoring Best Practice Guide was “Strengthened MI and insight quality”, built on “clearly articulated outcome statements and expected harms” that “should not sit as conceptual statements within policy documents” but must directly inform MI design, root-cause analysis and testing. We also stressed that firms must translate those statements into “observable, testable indicators”, shifting away from activity metrics (call answered within X seconds) towards genuine outcome measures (issue resolved at first contact, without harm).
Practical pointers
- Map end-to-end customer journeys, by product and service, defining the intended good customer outcomes and the associated foreseeable harms at each stage.
- Identify the controls and safeguards designed to deliver those good outcome statements and mitigate foreseeable harms, with clear linkages between outcomes, harms and controls.
- Ensure data and MI provide clear evidence that controls are operating effectively to prevent harm and deliver intended customer outcomes. Avoid over reliance on activity or process measures that do not demonstrate whether customer outcomes are being achieved in practice.
- Assess control effectiveness using both quantitative and qualitative evidence, including outcomes testing, customer feedback and behavioural insights.
- Regularly review monitoring coverage across the end-to-end customer journey, outcome statements and foreseeable harms, addressing any gaps or emerging risks identified.
2. Thresholds that reveal risk, not hide it
Key FCA observations
The FCA highlighted good practice examples of firms using governance processes to review and challenge outcome thresholds, ensuring they remained meaningful indicators of risk rather than becoming too easy to achieve. In some cases, firms deliberately set targets above historic performance levels to drive continuous improvement in customer outcomes. However, the FCA also identified firms that were unable to clearly evidence the rationale for thresholds applied to measures such as complaints, file reviews and customer retention, raising concerns over whether those thresholds were appropriately calibrated to identify emerging customer harm and outcome risks.
Our February Insight
“Tolerances calibrated to reveal – not obscure – risk”: we observed that many frameworks set thresholds at levels that mask early indicators of poor outcomes, and that dashboards showing “green” while underlying outcomes deteriorate signal mis-calibration. We paired this with a “challenge-based mindset for boards”.
Practical pointers
- Review and challenge outcome thresholds regularly, ensuring they remain aligned to customer harms, risks and outcomes.
- Maintain clear ownership, data lineage, quality controls and known limitations for key outcome metrics, so senior management and boards understand the reliability of the evidence being used
- Deliberately set some targets above historic performance where outcomes should be improving, not just holding steady
- Challenge consistently any metric that is consistently “green” and ask whether that reflects genuinely good outcomes or a threshold set too low to fail
- Periodically recalibrate measures, tolerances and triggers to reflect evolving customer journeys and risks
3. Closing the loop: from issue to evidenced improvement
Key FCA observations
The FCA’s strongest best practice examples showed a full audit trail: an issue identified through MI (e.g. delays caused by posted ID documents), a specific change made (piloting multi-bureau verification), and a measured improvement (a 5% rise in AML pass rates, a 20% rise in bank verification pass rates). Where this was weak, firms “could not show how [MI] helped them make decisions or improve customer outcomes”, and some agreed remedies, such as LiveChat and escalation fixes, were later shown not to have worked in practice.
Our February Insight
We set this out in action 8 of our Outcomes Monitoring Best Practice Guide, “build strong action/impact loops”: every action taken in response to poor outcomes should be traceable through a specific issue, an expected improvement, and outcomes testing that demonstrates the issue has been resolved (i.e. not simply completed). We recommended a structured outcomes action log as “a central evidential thread” from identification through to measurable customer impact, reviewable by senior management and the Board.
Practical pointers
- Maintain a single outcomes action log linking issues, remediation, outcomes testing and customer impact. Distinguish between “action completed” and “outcome improved” as two separate, separately-evidenced steps – never conflate them
- Define and measure expected customer outcome improvement, not just harm reduction
- Validate remediation through outcomes testing, not implementation alone
- Re-test previously “closed” remedies periodically; the FCA specifically flagged cases where agreed fixes had quietly stopped working
4. Vulnerability: monitored, but not yet delivering
Key FCA observations
The FCA observed that, while some firms monitor outcomes for vulnerable customers separately from other customer cohorts, this was not sufficiently granular to identify whether different drivers of vulnerability such as health, financial resilience or life events, were leading to different barriers or poorer outcomes. The FCA’s stronger examples used vulnerability specific indicators and triggers, including financial vulnerability measures, to identify potential harm earlier and prompt more tailored customer support, rather than relying on aggregated MI that could obscure differences between vulnerable customer groups.
Our February and Research Insights
Action 4 in our February 2026 Outcomes Monitoring Best Practice Guide called for “full integration of vulnerability” into monitoring, testing and reporting, not treatment as a bolt-on framework. Our May 2026 Consumer Duty Research Paper went further, using YouGov’s Consumer Duty Index to show the scale of the execution gap: vulnerable consumers score 55% on the overall CDI against 63% for non-vulnerable consumers – an 8-point gap consistent across all four vulnerability categories – and while 34% of vulnerable consumers need reasonable adjustments, only 16% are using them, with 54% saying they have never even been asked if they need one.
Vulnerable consumers: overall Consumer Duty Index score | 55% |
Non-vulnerable consumers: overall Consumer Duty Index score | 63% |
Vulnerable consumers who need reasonable adjustments | 34% |
Vulnerable consumers who actually use reasonable adjustments | 16% |
Vulnerable consumers never asked if they need an adjustment | 54% |
Practical pointers
- Segment vulnerability MI by specific driver, including health, life events, financial resilience and capability, so firms can identify whether different vulnerability characteristics are creating different barriers, harms or poorer outcomes across the customer journey.
- Move beyond passive reliance on customer disclosure by proactively identifying and asking customers whether they need reasonable adjustments, supported by staff prompts, journey controls and MI that tracks adjustment need, offer, take-up and outcomes.
- Monitor outcome gaps between vulnerable and non-vulnerable customers as a standing Board and senior management metric, with sufficient granularity to identify whether particular vulnerable cohorts are experiencing worse outcomes and whether targeted support is improving those outcomes over time.
- Use vulnerability-specific indicators, triggers and early-warning measures, including financial vulnerability indicators, to identify potential harm earlier and prompt more tailored interventions before poor outcomes crystallise.
5. Boards that challenge, not just receive
Key FCA observations
Stronger firms reported customer outcomes to the board throughout the year, with named senior accountability, board attestation and evidence that challenge led to action plans with owners and target dates. But the FCA also found that boards are “usually given regular updates” yet “it is not always clear how they use this information”, with many “focused on reviewing and approving reports rather than challenging them or pushing for further action.”
Our February Insights
Our third, seventh and ninth actions of our Outcomes Monitoring Best Practice Guide addressed this directly: a challenge-based mindset for boards, boards demonstrating ownership by being able to explain how they challenge weak MI, and stronger board reporting built around “fewer but far richer insights.” Our Consumer Duty White Paper flagged the scale of the perception gap: 89% of respondents described their Consumer Duty Board report as robust and effective, yet the FCA’s own review of board reports “suggests this confidence may be overstated.”
Practical pointers
- Test Board papers against a supervisory lens: could the FCA clearly see how outcomes evidence informed challenge, changed a decision or led to further action?
- Evidence Board ownership by recording the questions asked, assumptions challenged, additional analysis requested, actions agreed, owners assigned and follow-up outcomes reported back.
- Prioritise fewer, richer Board insights that explain outcome trends, root causes, customer impact and management response, rather than high-volume MI packs that invite passive review and sign-off.
6. Governance and third parties: clear structures, unclear operation
Key FCA observations
The FCA saw positive examples of firms using MI, regular reviews and escalation routes to manage outcomes delivered through outsourced providers and distribution partners, including requesting changes to misleading communications. But more broadly, it found that “many firms describe clear governance structures” yet it is “often less clear how these arrangements work day-to-day” – firms describe what exists rather than how they use it, including in oversight of third parties.
Our February and Research Insights
Action 10 of our Outcomes Monitoring Best Practice Guide emphasised the importance of evidencing how governance forums, escalation routes and third-party oversight arrangements drive decisions and improve outcomes, while our May 2026 Consumer Duty Research Paper highlighted wider challenges around MI quality and effective Board reporting. Together, both publications anticipated the FCA’s concern that firms can often describe governance structures but provide less evidence of how they operate day-to-day to deliver good customer outcomes.
Practical pointers
- Document how customer outcome issues move through governance and committee structures, from issue identification and paper submission through to challenge, decision, action and evidence of customer impact.
- Ensure governance forums receive sufficiently granular outcomes MI, supported by clear escalation triggers and defined thresholds for management intervention.
- Maintain evidence of management and board challenge, including questions raised, additional analysis requested, actions agreed and subsequent outcomes delivered.
- Extend outcomes MI, monitoring and escalation routes formally to distributors and outsourced providers, with named accountability for each material third-party relationship
- Run periodic independent challenge reviews that mirror FCA scrutiny and assess whether governance arrangements demonstrably improve customer outcomes rather than simply document them.
The evidence challenge is now decisive
The direction of travel is clear enough on its own terms. The regulator’s language has shifted from asking whether monitoring frameworks exist, to asking whether firms can evidence that monitoring changes decisions and improves outcomes in practice. The gap between board confidence and the underlying evidence base is now a live supervisory issue, not a theoretical one.
Firms that can demonstrate, not just assert that their monitoring identifies both good and poor outcomes, that MI is driving genuine decisions, and that boards are actively engaged in the process, will be significantly better positioned for the scrutiny ahead. Those relying on aggregated MI, retrospective reporting and governance that looks robust on paper but cannot withstand evidential challenge should treat this review as a clear prompt to close the gap.
How Square 4 can help
As FCA scrutiny increasingly focuses on whether firms can evidence that monitoring drives better customer outcomes in practice, Square 4 helps firms move beyond framework design and build a robust, end-to-end outcomes assurance capability.
Design and implement robust outcomes monitoring frameworks
We help firms develop practical, FCA-aligned outcomes monitoring frameworks that provide clear evidence of customer outcomes across the entire customer lifecycle. This includes:
- End-to-end customer journey mapping across products, services and distribution channels.
- Identification of intended customer outcomes, foreseeable harms, controls and customer safeguards.
- Definition of meaningful outcome measures, thresholds, indicators and management information.
- Development of governance, escalation and reporting frameworks that provide clear evidence of how monitoring informs decision-making and improves customer outcomes.
Deploy award-winning outcomes testing methodologies
Square 4 designed the outcomes testing framework recognised by the International Compliance Association (ICA) when awarding Compliance Consultancy Firm of the Year. We help firms implement robust outcomes testing programmes that assess whether individual customer interactions are genuinely delivering good outcomes in practice by:
- Testing customer journeys, decisions and interactions against defined good outcome criteria.
- Identifying customer harm, vulnerabilities, conduct risks and control weaknesses.
- Providing objective evidence that monitoring and remediation activities are delivering measurable improvements in customer outcomes.
- Creating the evidential audit trail increasingly expected by regulators and Boards.
Scale outcomes testing using AI-powered assurance technology
Our market-leading AI-powered assurance platform Assure 4 enables firms to undertake outcomes testing at a scale, speed and cost that would be difficult to achieve through traditional manual reviews alone.
Available either as a fully managed service delivered by Square 4 or through a SaaS deployment within your organisation, the platform can:
- Review and assess large volumes of customer interactions across multiple channels.
- Consistently evaluate customer outcomes against a defined ICA award-winning methodology.
- Identify emerging customer harm, vulnerability indicators and conduct risks.
- Deliver significantly greater testing coverage at a fraction of the cost of manual review programmes.
- Generate actionable insights and management information that support Consumer Duty, vulnerability, quality assurance and conduct monitoring requirements.
Contact Us
Whether you are enhancing your outcomes monitoring framework, embedding outcomes testing for the first time or looking to transform your assurance capability through AI, Square 4 provides the regulatory expertise, proven methodologies and technology solutions needed to evidence good customer outcomes with confidence. Contact us at: hello@square4.com
Darren Fisher – Senior Advisory Director
