Getting authorised does not mean the FCA stops watching. For most firms, it means the FCA starts watching differently.
Under AML registration, the FCA’s supervisory relationship with a firm was primarily focused on financial crime controls. With authorisation, that remit expands significantly — and Consumer Duty sits at the centre of the FCA’s ongoing supervisory priorities for retail-facing firms.
This piece is not about what Consumer Duty requires at authorisation — that has been covered in earlier pieces in this series. It is about what the supervisory relationship looks like once a firm is authorised: what the FCA monitors, how it intervenes, and what firms should expect from a regulator that has published its own supervisory findings and has made clear it intends to act on them.
The Shift from Registration to Authorisation
The supervisory relationship under MLR registration was reactive for most firms. Unless the FCA had specific concerns about a firm’s AML controls, the day-to-day supervisory experience was limited. Firms submitted annual fees, maintained their registration, and interacted with the FCA primarily when they had something to notify or when the FCA had a specific query.
Authorisation is different. Authorised firms have a named supervisor at the FCA — either a dedicated relationship manager for larger firms or a portfolio supervisor for firms within a supervision portfolio. They receive sector-wide communications about supervisory priorities. They may be subject to proactive data requests, thematic reviews, or firm-specific reviews at any time. And they have ongoing regulatory reporting obligations that create a continuous flow of information from firm to regulator.
For Consumer Duty specifically, the FCA has made clear that its supervision of authorised retail-facing firms will be evidence-based and ongoing — not a one-time implementation check followed by a period of monitoring.
The FCA’s Consumer Duty Supervisory Toolkit
The FCA has several tools it uses to supervise Consumer Duty compliance in authorised firms. Understanding what those tools are helps firms anticipate what the supervisory relationship will look like in practice.
Annual board report review. The FCA requests copies of firms’ annual Consumer Duty board reports as part of its supervisory activity and has published findings from those reviews. Its April 2026 observations on year two board reports identified consistent weaknesses: reports that present MI without drawing conclusions about outcomes, boards that are presented with numbers without being asked to challenge them, and monitoring that covers some outcomes in depth while giving superficial treatment to others. When the FCA requests your board report, it is not looking for a document — it is looking for evidence that your board is genuinely overseeing customer outcomes.
Data requests and management information. The FCA can request specific management information from authorised firms at any time – customer outcome data, complaint analysis, vulnerable customer identification records, appropriateness assessment outcomes. Firms that cannot produce this quickly and completely signal that their monitoring framework is not functioning. The FCA’s March 2026 consumer understanding review found that firms frequently could not demonstrate how they assess whether customers genuinely understood their products – not just whether disclosures had been made.
Thematic reviews. The FCA conducts thematic reviews across groups of firms – examining a specific Consumer Duty aspect across multiple firms simultaneously. These result in published findings that set sector expectations and may result in individual firm follow-up. The FCA’s multi-firm outcomes monitoring review, expected to be published later in 2026, will do exactly this.
Supervisory visits and interviews. For firms where the FCA has concerns – whether from a thematic review, a data request, or a complaint pattern – it may conduct a supervisory visit or request interviews with senior management. These are substantive engagements, not administrative check-ins.
Skilled persons reviews (section 166). Where the FCA has serious concerns about a firm’s Consumer Duty compliance, it can require the firm to appoint an independent expert to review a specific aspect of the firm’s framework and report directly to the FCA. This is a significant and costly supervisory tool – the cost falls on the firm – and its use signals that the FCA’s concerns are beyond what standard supervisory engagement can resolve.
What Changes for Consumer Duty at Authorisation
The Consumer Duty obligations themselves do not change at authorisation. What changes is the intensity and formality of the supervisory relationship through which those obligations are monitored.
The board report becomes a supervisory document, not an internal one. Under registration, the FCA had limited visibility of a firm’s Consumer Duty board report. Under authorisation, the firm should assume the FCA may request it at any time. The question shifts from “does our board report meet our own standard?” to “would this report satisfy the FCA if it arrived on a supervisor’s desk tomorrow?”
Outcome monitoring is tested against the FCA’s published standard. The FCA has published what good outcome monitoring looks like and where firms consistently fall short. Authorised firms should expect to be asked not just what they monitor, but what that monitoring tells them — and what they have done in response. Data that is collected and filed without driving decisions is not outcome monitoring; it is record-keeping.
Senior management accountability becomes personal. Under the Senior Managers and Certification Regime (SM&CR), which applies to authorised firms, specific individuals are personally accountable for specific areas of the firm’s regulatory compliance. The senior manager responsible for Consumer Duty oversight has a personal regulatory obligation to ensure the firm’s Consumer Duty framework is adequate and functioning. If it is not, individual accountability — not just firm accountability — is in play.
Complaints become a supervisory signal. Authorised firms’ complaints data is available to the FCA, and patterns in complaint volumes, types, and resolution outcomes are used as early warning signals of potential Consumer Duty issues. A firm with a rising complaint rate in a specific area can expect supervisory enquiry about whether that pattern reflects a systemic gap.
Worth asking:
If your FCA supervisor contacted you today and asked to see your most recent Consumer Duty outcome monitoring data — specifically for vulnerable customers — how quickly could you produce it, and would it show evidence of genuine board engagement or a document that was filed and forgotten?
What Firms Should Be Building Now
The firms that will manage the post-authorisation supervisory relationship most effectively are those that have built their Consumer Duty framework to operate continuously — not as a compliance project that was completed at authorisation but as an ongoing operational function.
A board report cadence that reflects supervisory reality. The FCA requires an annual report, but firms that produce quarterly board updates are in a materially stronger position when the FCA requests the annual report — the underlying data is more current, the board has engaged with it multiple times, and the paper trail demonstrates genuine ongoing oversight. When the FCA publishes its outcomes monitoring review findings later in 2026, firms with quarterly reporting will be better placed to respond to any findings than those producing a single annual document.
A vulnerable customer register that is live, not static. Firms should be able to produce a current picture of how many customers have been identified as potentially vulnerable, through what mechanism, and what has been done for each. The FCA’s supervisory focus on vulnerable customers is intensifying — its thematic work in this area is ongoing and the findings consistently identify the same gap: identification processes that exist on paper but do not produce a live, maintained record.
SM&CR accountability mapped explicitly to Consumer Duty. The senior manager responsible for Consumer Duty oversight should have a clear Statement of Responsibilities covering this function, should be receiving regular management information on Consumer Duty outcomes, and should be able to demonstrate personal engagement with the framework — not just annual sign-off. In a supervisory visit or individual interview, the FCA will expect the SMF holder to speak to the substance of the framework, not just confirm it exists.
A response process when monitoring identifies gaps. The FCA’s supervisory findings consistently identify firms that have monitoring in place but no documented process for responding when it identifies a poor outcome. The monitoring-to-action loop — what happens when the data shows something is wrong — is where most firms’ operational framework breaks down, and where the FCA focuses when it conducts a detailed review.
Final Thought
The FCA has invested significant resource in building its Consumer Duty supervisory capability and has published extensive findings on where firms are falling short. The post-authorisation supervisory relationship is not a continuation of the MLR registration experience — it is a fundamentally different and more demanding engagement.
The firms best placed going into this period are those that have treated Consumer Duty as a continuous obligation from the start — building the evidence, maintaining the monitoring, giving their boards genuine data to engage with, and mapping personal accountability to the SMF holders responsible for it. That is what the FCA’s supervisory toolkit is designed to find. And, where it is absent, to act on.
If you want to understand how your Consumer Duty framework stands up to ongoing FCA supervision, speak to our team.
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We help authorised and applying firms build Consumer Duty frameworks that meet the FCA’s ongoing supervisory expectations – not just at authorisation, but continuously.
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This article is for general information purposes only and does not constitute legal or regulatory advice. LHI Consulting is a trading style of LHI Holdings Ltd, registered in England and Wales, No. 11496647.
FAQs
Does the FCA automatically supervise all authorised firms for Consumer Duty compliance?
Yes. Consumer Duty applies to all FCA-authorised firms that have retail customers. The intensity of supervision varies by firm size and risk profile, but all authorised firms should expect Consumer Duty to be part of their ongoing supervisory relationship with the FCA.
What is a skilled persons review and when does the FCA use it?
A skilled persons review — under section 166 of FSMA — requires the firm to appoint an independent expert approved by the FCA to review a specific aspect of the firm’s business and report to the FCA. The cost falls on the firm. Its use signals that the FCA’s concerns are beyond what standard supervisory engagement can resolve.
We are a small crypto firm. Will the FCA’s Consumer Duty supervision look different for us?
The Consumer Duty obligations are the same regardless of firm size. Smaller firms may receive less frequent proactive supervisory contact — but they are not exempt and should not assume that size provides protection.
How does SM&CR change individual accountability for Consumer Duty?
Under SM&CR, specific individuals hold named Senior Management Functions and are personally accountable for the areas within their remit. Where Consumer Duty oversight is inadequate, the FCA can take action against the individual responsible as well as the firm.
Our Consumer Duty framework was reviewed as part of our authorisation application. Is that sufficient for ongoing supervision?
No. The authorisation assessment confirmed the framework was adequate at the point of application. Ongoing supervision assesses whether the framework continues to be adequate and is actually delivering good outcomes. A framework that has not been maintained or evidenced since authorisation is unlikely to meet the FCA’s ongoing supervisory expectations.