A Practical Guide to FCA Consumer Duty Outcomes Monitoring, Collections, Vulnerability, Customer Journeys and Governance

1. What Does FCA Consumer Duty Mean for Arrears Management in 2026?

The FCA’s 2025/26 priority areas make clear that embedding the Consumer Duty remains a central supervisory focus.

The FCA has stated that it will undertake multi-firm projects to understand how the Duty is being embedded across sectors. These projects are designed to:

• Share good and poor practice,
• Address areas of actual or potential consumer harm,
• Gather data where necessary to assess how firms are delivering good outcomes,
• Provide feedback where firms need support with implementation.

While the FCA has not included firm-specific supervisory work in its published priorities, it has signalled that it will continue to assess how firms are delivering good outcomes through the products and services they offer.

Arrears management is one of the most sensitive areas in which Consumer Duty outcomes are tested. It is here that firms must demonstrate that they:

• Act in good faith,
• Avoid foreseeable harm,
• Enable and support customers to pursue their financial objectives,
• Monitor outcomes and take corrective action where necessary.

This document has been developed to support FCA-regulated firms in preparing for thematic review, supervisory engagement and internal governance discussions relating to the embedding of the Consumer Duty within arrears operations.

2. FCA 2025/26 Priority Areas and What They Mean for Arrears

The FCA has prioritised initiatives where:

• It can share more information on good and poor practice,
• There is the greatest risk of actual or potential harm,
• More data is required to assess embedding of the Duty,
• There are opportunities to streamline rules and reduce unnecessary burden while improving outcomes.

In this context, arrears management is likely to attract attention because it involves:

• Customers experiencing financial difficulty,
• Heightened risk of vulnerability,
• Frequent customer contact,
• Decisions around forbearance, fees, and treatment pathways,
• Potential conduct and reputational risk.

The FCA has made clear that:

• It may request data where needed to assess embedding,
• It recognises that firms face different challenges,
• It expects implementation to be proportionate to firm size and activities,
• It may set out different approaches for smaller firms where appropriate.

Accordingly, firms should ensure that arrears operations are not only compliant with product-specific rules but demonstrably aligned with Consumer Duty outcomes and supported by appropriate monitoring and governance.

This playbook provides a structured framework to support that objective.

3. Scope and Proportionality

3.1 Scope of Application

This playbook applies to any FCA-regulated firm that engages with customers in arrears or payment difficulty.

Arrears arise across multiple retail financial services contexts, including consumer credit, mortgages, overdrafts and other regulated lending arrangements. While product-specific rules (for example, CONC or MCOB where applicable) continue to apply, the Consumer Duty introduces a broader outcomes-based standard that cuts across all regulated activities.

Firms should therefore ensure that arrears operations are:

• Consistent with product rulebooks, and
• Explicitly aligned with Consumer Duty cross-cutting rules and outcomes.

This playbook is designed to support that alignment.

3.2 Proportional Embedding in Practice

The FCA has made clear that firms should take an approach proportionate to their size and activities.

In arrears operations, proportionality does not reduce responsibility — it shapes implementation.

For example:

Smaller or less complex firms may demonstrate embedding through:

• Clearly documented arrears policies,
• Defined good-outcome statements,
• Structured but manual MI,
• Senior management review minutes evidencing challenge and oversight.

Larger, multi-product or higher-risk firms may require:

• Automated segmentation and monitoring,
• Structured vulnerable-customer outcome analysis,
• Formal governance forums dedicated to outcomes review,
• Documented journey testing and barrier remediation logs.

The test is not operational scale.
The test is whether the firm can demonstrate — with evidence — that it understands its arrears outcomes and takes action where those outcomes fall short.

4. Aligning Arrears Management to the FCA’s Cross-Cutting Reviews

The FCA’s 2025/26 cross-cutting projects provide a practical lens through which arrears embedding should be assessed.

4.1 How Should Arrears Treatments Deliver Good Consumer Duty Outcomes?

Designing Arrears Treatments That Deliver Good Outcomes

Although arrears management occurs after product origination, it remains part of the product lifecycle.

Supervisory focus is likely to consider whether arrears treatment design:

• Supports sustainable repayment

In practical terms, this means firms should assess whether arrangements are structured to succeed beyond the immediate month.

Examples of considerations:

Are repayment plans based on evidenced affordability rather than standardised percentages?

Are short-term deferrals followed by realistic re-engagement plans, or do they simply defer failure?

Is arrangement success monitored at 3- and 6-month intervals?

Are high re-default rates triggering strategy review?

A sustainable repayment framework should prioritise stability over short-term cure metrics.

• Avoids creating avoidable harm

Arrears processes can inadvertently cause harm through design features rather than intent.

Firms may consider:

Whether fee and interest policies exacerbate indebtedness where customers are already in financial difficulty.

Whether automated escalation (e.g., rapid movement to default or enforcement) allows sufficient opportunity for engagement.

Whether communication frequency could create distress rather than constructive action.

Whether internal performance incentives inadvertently prioritise recovery over fair treatment.

Avoidable harm is often systemic rather than case specific. Firms should periodically review whether strategy rules produce unintended negative outcomes.

• Applies forbearance appropriately

Where relevant under product-specific rules, firms should ensure that forbearance is:

Clearly defined within policy.

Accessible to customers who meet reasonable criteria.

Applied consistently across similar cases.

Not overly restrictive due to internal approval barriers.

Practical questions include:

Are frontline staff empowered to offer appropriate support within defined limits?

Are vulnerable customers routed to specialist teams where enhanced discretion is needed?

Is there governance oversight of declined forbearance decisions?

Are interest and fee adjustments aligned with the customer’s capacity to recover?

Appropriate application does not mean uniform application — it means reasoned, documented and fair decision-making.

• Treats customers consistently and fairly

Consistency does not require identical treatment, but it does require structured decision-making.

Firms should consider:

Whether segmentation logic is documented and explainable.

Whether customers in similar circumstances receive materially similar options.

Whether manual discretion is governed and reviewed.

Whether outcome differences across demographics or vulnerability status are monitored.

Fair treatment in arrears often depends on whether discretion is controlled rather than arbitrary.

• Delivers outcomes that align with customers’ financial objectives.

The Consumer Duty requires firms to enable and support customers in pursuing their financial objectives.

In arrears, this may involve:

Ensuring customers understand the long-term implications of different options (e.g., short deferral vs extended plan)

Supporting customers in stabilising their financial position rather than repeatedly cycling through short-term fixes.

Signposting to debt advice where the firm’s internal solutions are insufficient.

Recognising when enforcement action may undermine a customer’s ability to recover financially.

The test is not whether the firm maximises recovery, but whether the treatment pathway gives the customer a reasonable opportunity to return to financial stability.

Firms should be able to articulate:

• What “good outcome” looks like in arrears,
• How treatment pathways are structured,
• How affordability and vulnerability influence available options,
• How interest, fees and enforcement decisions are governed.

A clearly documented treatment framework (or “solution ladder”) should outline available options, escalation triggers and approval controls.

Where outcome monitoring identifies systematic re-default or treatment failure, firms should review whether the design itself requires adjustment.

4.2 How Should Firms Monitor Consumer Duty Outcomes in Arrears and Collections?

Moving from Activity Metrics to Outcome Evidence

The FCA has prioritised understanding how firms are embedding outcomes monitoring and how they respond where outcomes are poor.

For FCA Consumer Duty arrears management, firms should move beyond traditional collections metrics such as cure and recovery rates and measure whether customer outcomes are fair, stable and sustainable.

Supervisory scrutiny is likely to consider whether firms:

Define what “good outcome” means in arrears.

Measure whether that outcome is being achieved.

Identify cohorts experiencing worse outcomes.

Take action where results fall short.

Below are practical illustrations of what this means in practice.

Defining Good Outcomes in Arrears

Firms should clearly define what a good Consumer Duty outcome looks like for customers in arrears or financial difficulty.

For example:

A customer in temporary financial difficulty enters a plan they can maintain without repeated failure.

A vulnerable customer receives tailored support that reduces stress and improves stability.

A customer who cannot reasonably repay is supported toward appropriate external advice.

Contact strategies result in constructive engagement rather than avoidance.

If good outcomes are not defined, they cannot be monitored.

Monitoring Sustainability, Not Just Cure

Traditional metrics such as cure rate or recovery rate are insufficient in isolation.

Firms may consider tracking:

Arrangement success at 3 and 6 months.

Re-default within 90 or 180 days.

Number of repeated short-term arrangements per customer.

Frequency of broken promises to pay.

Movement between arrears stages over time.

If a high proportion of customers re-enter arrears shortly after completing an arrangement, this may indicate treatment design weakness rather than customer unwillingness.

Segmenting Outcomes

Outcome monitoring should not be purely portfolio-level.

Firms should consider whether outcomes differ materially by:

• Vulnerability status.
• Product type.
• Channel used (digital vs assisted)
• Treatment path (deferral vs structured plan)
• Internal vs outsourced handling.

For example:

• Are digitally self-serve arrangements less stable than assisted arrangements?
• Do vulnerable customers experience longer resolution times?
• Are complaints concentrated in a particular arrears stage?

Segmentation allows firms to identify systemic issues rather than relying on anecdotal insight.

Using MI to Drive Action

Monitoring alone is not embedding.

Firms should be able to demonstrate:

• Where outcome metrics are reviewed.
• Who challenges them.
• What decisions are taken.
• What changes are implemented.
• Whether those changes improved outcomes.

Examples of corrective actions might include:

• Revising affordability thresholds.
• Reducing default escalation speed.
• Adjusting contact frequency caps.
• Increasing specialist team capacity.
• Improving digital journey clarity.

The FCA’s interest is not only whether firms collect data, but whether they act on it.

4.3 How Should Firms Design Consumer Duty-Compliant Arrears Customer Journeys?

Removing Unreasonable Barriers and Applying Appropriate Friction

The FCA’s review of customer journey design focuses on whether firms structure processes in a way that supports customer needs. In arrears, journey design often determines whether customers engage early — or avoid contact until the situation deteriorates.

Supervisory consideration is likely to include whether firms understand:

• Where friction exists.
• Whether that friction protects or harms.
• How different customer groups experience the journey.

Early Access to Support

Firms should assess whether customers can access support before formal default or enforcement stages.

Practical questions include:

• Can customers request assistance digitally without making a phone call?
• Are hardship options visible before late-stage letters are issued?
• Are payment-date changes or short-term flexibility accessible through self-serve tools?

If early engagement is difficult, customers may disengage until arrears deepen.

Identifying and Removing Unreasonable Barriers

Unreasonable barriers may arise unintentionally.

Examples include:

• “Call only” requirements when customers have limited phone access.
• Long IVR queues during peak stress periods.
• Repeated requests for the same documentation.
• Multiple identity verification failures.
• Chatbot journeys that end without escalation to a human.

Firms may conduct periodic “barrier testing” by mapping:

• Drop-off points in digital journeys.
• Call abandonment rates.
• Average time to reach specialist support.
• Repeat contact frequency before resolution.

Documenting and remediating barriers demonstrates embedding.

Applying Appropriate Friction

Not all friction is harmful.

Examples of appropriate friction may include:

• Confirming affordability before accepting a repayment plan.
• Providing warnings about long-term consequences of certain options.
• Escalating complex cases to specialist review.

The key question is whether friction protects customers from harm — or obstructs access to support.

Channel Continuity

Customers increasingly move between digital and assisted channels.

Firms should consider:

• Whether customer context is preserved across channels.
• Whether advisers have access to full interaction history.
• Whether customers are required to repeat information unnecessarily.

Fragmented channel experiences can undermine both efficiency and consumer understanding.

4.4 How Can Arrears Communications Improve Consumer Understanding?

Communications That Enable Informed Decisions

The Consumer Understanding outcome requires communications that support effective decision-making. In arrears, communications play a central role in influencing engagement, stress levels and resolution outcomes.

Supervisory assessment may consider whether communications:

• Are supportive in tone.
• Avoid excessive frequency.
• Clearly explain options and consequences.
• Enable access to independent advice where appropriate.

Supportive Language and Tone

Firms may review whether communications:

• Avoid language that could be perceived as threatening or coercive.
• Clearly separate information from enforcement warnings.
• Use plain English rather than technical terminology.
• Provide reassurance alongside accountability.

QA frameworks may assess:

• Tone consistency across channels,
• Adherence to script standards,
• Customer feedback regarding communication experience.

Contact Frequency and Governance

Excessive communication may create pressure without improving engagement.

Firms may implement:

• Stage-based frequency caps,
• Channel sequencing logic,
• Suppression rules during complaints, vulnerability flags or Breathing Space,
• Monitoring of contact attempts per account.

Outcome monitoring should assess whether increased contact volume improves or worsens engagement rates.

Clear Explanation of Options

Communications should make it easy for customers to understand:

• What has happened.
• What options are available.
• What action is required.
• What happens if no action is taken.

For example, repayment plan options should include:

• Duration.
• Total cost implications.
• Impact on credit file where relevant.
• Next review point.

Clarity supports informed decision-making and reduces avoidable complaints.

Debt Advice and Third-Party Engagement

Where appropriate, firms should clearly signpost customers to free and impartial debt advice.

Operationally, this includes:

• Including advice information within relevant communications.
• Maintaining clear routes for advisers to contact the firm.
• Responding to adviser queries within defined SLAs.
• Ensuring suppression logic is triggered where adviser management begins.

Firms should be able to evidence how adviser engagement is handled and monitored.

5. The Integrated Arrears Operating Model

Embedding FCA Consumer Duty in collections and arrears management requires more than compliant policies; firms must demonstrate good customer outcomes through operational evidence. It requires a structured operating model that translates regulatory principles into day-to-day decision-making.

A proportionate but effective framework can be described as a closed-loop model:

Detect → Engage → Assess → Agree → Support → Learn

This model aligns operational execution with the FCA’s focus on products and services, outcomes monitoring, customer journey design and consumer understanding.

5.1 Detect and Prevent

(Aligns to Customer Journey Design and Products & Services Outcome)

Effective arrears management begins before accounts deteriorate significantly.

Firms should consider whether they have proportionate early-warning mechanisms that identify emerging financial stress, such as:

• Repeated failed payments.
• Sudden utilisation increases.
• Missed minimum payments.
• Broken arrangements.
• Changes in contact behaviour (e.g. disengagement)

Early detection supports better outcomes because it allows intervention before:

• Charges accumulate.
• Credit files deteriorate further.
• Enforcement pathways activate.

Supervisory consideration is likely to focus on whether early identification mechanisms are designed to:

• Encourage engagement.
• Reduce avoidable roll into deeper arrears.
• Provide accessible routes to support.

Governance implication:
Firms should periodically review whether early-stage intervention reduces later-stage harm and re-default.

5.2 Engage Appropriately

(Aligns to Consumer Understanding and Journey Design)

Engagement strategy influences whether customers respond constructively or disengage.

Firms should assess whether their contact framework:

• Applies defined frequency caps.
• Uses supportive and clear language.
• Differentiates by arrears stage.
• Avoids escalation pressure where engagement is ongoing.
• Provides clear next steps and available options.

Channel strategy should be proportionate and coherent. Considerations may include:

• Whether digital self-serve options are available.
• Whether customers can escalate to human support easily.
• Whether information provided digitally matches assisted-channel messaging.

Supervisory focus may include whether communication strategy is designed around outcomes rather than volume.

Governance implication:
Outcome metrics (e.g. engagement rates, complaint levels, stress indicators) should inform contact strategy review.

5.3 Assess Affordability and Vulnerability

(Aligns to Products & Services Outcome and Outcomes Monitoring)

Assessment is the point at which treatment becomes individualised.

Firms should consider whether affordability assessments:

• Are proportionate to the level of risk and exposure.
• Capture sufficient information to assess sustainability.
• Avoid unnecessary complexity.
• Are consistently applied.

Vulnerability identification should be practical and structured. This may include:

• Customer disclosure pathways.
• Observable indicators.
• Referral to specialist teams where appropriate.
• Recording reasonable adjustments proportionately.

Supervisory attention is likely to focus on:

• Whether affordability assessments are robust enough to support sustainable arrangements.
• Whether vulnerable customers receive tailored support.
• Whether outcome differences are monitored.

Governance implication:
Declined support decisions, vulnerability overrides and specialist referrals should be subject to oversight and periodic review.

5.4 Agree a Sustainable Solution

(Aligns to Products & Services Outcome)

Agreement of a treatment pathway should reflect:

• Documented affordability.
• Vulnerability considerations.
• Consistent application of forbearance where relevant.
• Transparent explanation of consequences.

Firms may consider:

• Whether repayment duration is realistic.
• Whether short-term solutions are overused.
• Whether staff incentives align with sustainability rather than speed.
• Whether enforcement escalation allows sufficient opportunity for engagement.

Supervisory scrutiny may assess whether high re-default rates indicate systemic design issues rather than customer unwillingness.

Governance implication:
Treatment design should be reviewed where sustainability metrics deteriorate.

5.5 Support and Monitor

(Aligns to Outcomes Monitoring)

The Consumer Duty is not satisfied once an arrangement is agreed.

Firms should monitor:

• Missed instalments within active arrangements.
• Repeat requests for short-term support.
• Silent arrangement failure.
• Post-plan stability.

Early re-engagement may prevent escalation and additional harm.

Supervisory interest may include whether firms:

• Actively monitor arrangement health.
• Intervene proportionately when risk increases.
• Analyse plan performance by cohort.

Governance implication:
Monitoring should feed into structured outcomes reviews, not remain operationally siloed.

5.6 Learn and Improve

(Aligns to Embedding the Duty Across Sectors)

Embedding the Duty requires periodic review of the entire arrears framework.

Firms should consider whether they conduct structured reviews that assess:

• Outcome metrics.
• Treatment effectiveness.
• Vulnerable customer experience.
• Communication strategy impact.
• Channel performance.

Importantly, firms should document:

• Issues identified.
• Decisions taken.
• Actions implemented.
• Subsequent outcome improvements.

This documentation demonstrates that embedding is active rather than declarative.

Supervisory consideration is likely to focus on whether firms can evidence that they:

• Identify weaknesses.
• Take corrective action.
• Learn across cohorts and product types.

6. Operational Focus Areas Requiring Explicit Controls

While the integrated operating model sets the overall framework, certain areas of arrears management require explicit and well-documented controls due to heightened regulatory sensitivity.

Supervisory scrutiny is more likely in areas where:

• Customers are experiencing acute financial stress.
• Vulnerability risk is elevated.
• Legal protections apply.
• Third parties are involved.
• Operational errors may directly cause harm.

Firms should ensure that these areas are supported by clearly defined processes, oversight mechanisms and audit trails.

6.1 Debt Respite Scheme (Breathing Space)

Where applicable (e.g. England and Wales), the Debt Respite Scheme introduces specific legal protections that materially alter arrears activity.

Given the legal and conduct implications, firms should maintain robust controls covering:

Intake and Identification

• Clear processes for receiving and validating notifications.
• Timely recording of start dates and included debts.
• Identification across all relevant systems and products.

Suppression of Activity

• Immediate suppression of communications across all channels (calls, SMS, email, letters, digital prompts)
• Suspension of enforcement workflows.
• Coordination with third-party agencies.

Interest, Fees and Charges

• Accurate freeze logic where required.
• Controls preventing backdating of interest following the end of protection (unless lawfully permitted)
• Reconciliation processes to ensure accuracy.

Adviser Engagement

• Clear contact routes for debt advisers.
• Defined SLAs for responding to queries.
• Proportionate authentication procedures.

Restart Controls

• Structured reactivation process once protection ends.
• Review of customer circumstances before recommencing contact.
• Clear documentation of restart decisions.

Governance implication:
Firms should maintain an auditable log demonstrating:

• When suppression was applied.
• What was frozen.
• When activity resumed.
• Any errors identified and remediated.

Given the clarity of statutory requirements, errors in this area are likely to attract regulatory attention.

6.2 Vulnerability and Tailored Support

Supporting vulnerable customers in arrears is a critical part of FCA Consumer Duty compliance and fair customer treatment. Supervisory focus continues to examine how firms identify and support such customers.

Firms should ensure vulnerability frameworks are:

• Practical,
• Proportionate,
• Embedded within arrears processes rather than isolated in policy.

Identification Mechanisms

This may include:

• Customer disclosure pathways.
• Observable indicators during interactions.
• Third-party notification (e.g. power of attorney)
• Defined escalation triggers.

Firms should ensure staff are supported in recognising potential indicators without requiring clinical assessment.

Recording and Data Governance

Recording should:

• Capture sufficient information to enable support.
• Avoid excessive data collection.
• Be accessible across relevant systems.

Reasonable Adjustments

Firms may consider whether they provide:

• Alternative communication channels.
• Extended response windows.
• Simplified documentation requirements.
• Specialist team handling.
• Adjusted authentication processes.

Outcome Monitoring

Crucially, vulnerability frameworks should not stop at identification.

Firms should assess whether vulnerable customers:

• Experience longer resolution times.
• Have higher re-default rates.
• Receive different treatment pathways.
• Generate higher complaint volumes.

If outcome gaps are identified, corrective action should be documented.

Governance implication:
Vulnerability outcomes should form part of structured Consumer Duty review discussions.

6.3 Third-Party and Outsourced Arrears Activity

Where arrears functions are outsourced, the firm retains regulatory responsibility.

Supervisory assessment may examine whether firms have adequate systems and controls to oversee third-party delivery of Consumer Duty standards.

Contractual Embedding

Contracts should reflect:

• Communication standards.
• Frequency caps.
• Vulnerability handling expectations.
• Breathing Space processes.
• MI reporting requirements.

Oversight and Monitoring

Firms should consider:

• Regular QA sampling (calls, written communications, digital interactions)
• Segmented outcome MI from suppliers.
• Escalation mechanisms for identified issues.
• Performance review cadence.

Data and Suppression Controls

Particular attention should be given to:

• Breathing Space suppression cascading correctly to agencies.
• Vulnerability flags transferring appropriately.
• Real-time status updates across systems.

Remediation Processes

Firms should maintain clear procedures for:

• Correcting third-party errors.
• Communicating with affected customers.
• Adjusting compensation where appropriate.
• Reviewing root causes.

Governance implication:
Oversight evidence should demonstrate that outsourcing does not dilute Consumer Duty standards.

7. Consumer Duty Arrears KPIs: How to Demonstrate Good Customer Outcomes

The FCA has made clear that it may request data where necessary to understand how firms are embedding the Consumer Duty and delivering good consumer outcomes.

In arrears management, firms should therefore ensure that they can demonstrate — with structured and segmented management information — that their strategies produce fair and sustainable outcomes.

Traditional collections metrics alone are unlikely to satisfy supervisory scrutiny. Outcome-based monitoring is essential.

The KPI framework below aligns to the FCA’s 2025/26 cross-cutting focus areas of Products & Services, Outcomes Monitoring, Customer Journey Design and Consumer Understanding.

7.1 Products & Services Outcome KPIs

Are arrears treatments delivering sustainable results?

Monitoring should assess whether treatment design supports stability rather than short-term recovery.

Examples of outcome-focused indicators include:

• Sustainable arrangement success rate
  Percentage of repayment plans maintained at 3 and 6 months.
• Re-default rate
  Percentage of customers returning to arrears within defined timeframes (e.g. 90 or 180 days) following resolution.
• Time to stable solution
  Median number of days from first missed payment to a sustainable arrangement.
• Treatment effectiveness comparison
  Performance by treatment type (e.g. short-term deferral vs structured plan).

Supervisory interest is likely to focus on whether firms identify when treatment pathways are associated with poor durability and whether they adjust design accordingly.

7.2 Outcomes Monitoring KPIs

Are different customer groups experiencing materially different outcomes?

Effective Consumer Duty outcomes monitoring requires firms to segment arrears outcomes by vulnerability, product, channel, treatment path and other relevant customer characteristics.

Firms should consider whether they monitor outcomes by:

• Vulnerability status,
• Product type,
• Arrears stage,
• Channel used (digital vs assisted),
• Internal vs outsourced handling.

Illustrative indicators:

• Outcome gap analysis
  Comparison of arrangement success rates between vulnerable and non-vulnerable customers.
• Resolution time by segment
  Median time to stability across cohorts.
• Complaint rate by arrears stage
  Identifying whether particular stages generate disproportionate dissatisfaction.
• Repeat support requests
  Frequency of customers requiring multiple short-term arrangements.

Where material differences are identified, firms should document:

• Root cause analysis.
• Remedial actions.
• Post-change outcome review.

The existence of segmentation is important; documented response to identified issues is critical.

7.3 Customer Journey Design KPIs

Are journey structures supporting or obstructing engagement?

Journey metrics should assess accessibility and friction.

Illustrative indicators:

• Digital self-serve completion rate
  Percentage of customers successfully completing digital hardship journeys.
• Drop-off rate at key journey stages
  Identification of friction points.
• Call abandonment rate
  Especially during arrears-related contact.
• Average time to reach specialist support
  Particularly for vulnerable escalations.
• Identity verification failure rate
  Indicating potential disproportionate friction.

Supervisory focus may include whether firms understand where customers disengage and whether those barriers are being addressed.

Monitoring should support periodic journey review exercises.

7.4 Consumer Understanding KPIs

Are communications enabling informed decisions?

Communication strategy should be measured for effectiveness and fairness.

Illustrative indicators:

• Contact frequency distribution per account
  Monitoring potential excessive communication.
• Engagement rate by channel and stage
  Assessing whether communication volume correlates with constructive action.
• QA supportive-language score
  Based on sampling across channels.
• Debt advice signposting rate
  Evidence that customers are informed of independent support where relevant.
• Debt adviser SLA adherence
  Median time to respond to adviser contact.

Monitoring should assess not only compliance with internal standards but also whether communications improve resolution outcomes.

7.5 Breathing Space and Legal Protections KPIs

Where applicable, firms should monitor:

• Suppression timeliness
  Percentage of accounts suppressed within defined hours of notification.
• Interest/fee freeze accuracy
  Error rate in application of statutory protections.
• Restart control accuracy
  Percentage of accounts reactivated correctly post-protection.

Given the legal dimension, accuracy rates are particularly important.

7.6 Governance and Review Cadence

KPIs should not exist solely within operational dashboards.

Firms should consider:

• Monthly operational review meetings,
• Quarterly Consumer Duty oversight reviews,
• Board-level reporting (proportionate to firm size),
• Documented challenge and decision logs.

Supervisory interest is likely to extend to:

• Who reviews outcomes.
• What challenge occurs.
• What changes result.
• Whether changes improve outcomes.

Embedding the Duty requires evidence of oversight and responsiveness.

7.7 Proportionality in KPI Design

Not all firms require complex analytics infrastructure.

Smaller firms may demonstrate embedding through:

• A concise dashboard covering core stability and vulnerability metrics,
• Manual cohort comparison.
• Structured review minutes.

Larger firms may require:

• Automated segmentation.
• Cohort-level dashboards.
• Trend analysis.
• Champion–challenger treatment testing.
• Formalised remediation tracking.

The standard is not technological sophistication — it is clarity, oversight and action.

8. What Evidence Should Firms Keep for FCA Consumer Duty Reviews?

The FCA has indicated that, as part of its work on embedding the Consumer Duty, it may request data where needed and provide feedback where firms require support with implementation.

Firms should therefore be prepared to demonstrate — clearly and proportionately — how the Consumer Duty is embedded within arrears operations.

An effective evidence pack does not require excessive documentation. It requires clarity of alignment between:

• Defined good outcomes.
• Monitoring activity.
• Governance oversight.
• Corrective action.

The following structure provides a practical framework.

8.1 Strategy and Governance Documentation

Demonstrating Intent and Oversight

Firms should be able to produce:

• A documented arrears strategy outlining objectives and treatment philosophy.
• Defined statements of what constitutes a “good outcome” in arrears.
• Governance minutes showing review of outcome MI.
• Evidence of challenge and decision-making.
• Records of policy amendments and rationale.

Supervisory consideration is likely to focus on whether embedding is evidenced through active oversight rather than static documentation.

Proportionality note:
For smaller firms, governance records may be concise but should clearly demonstrate engagement and challenge.

8.2 Policies and Control Frameworks

Demonstrating Operational Embedding

Firms should maintain current versions of:

• Arrears policy and procedures.
• Forbearance framework.
• Vulnerability handling policy.
• Communications governance standards.
• Breathing Space procedures (where applicable)
• Third-party oversight framework.

Supervisory interest may include whether these policies:

• Reflect Consumer Duty language.
• Are aligned to product-specific rules.
• Are reviewed periodically.
• Translate into practical controls.

Evidence of periodic policy review supports embedding.

8.3 Customer Journey and Barrier Testing Records

Demonstrating Consideration of Friction

Firms should consider maintaining documentation evidencing:

• Journey maps across digital and assisted channels.
• Identified friction points.
• Actions taken to remove unreasonable barriers.
• Testing results following remediation.

Examples may include:

• Adjustments to authentication steps.
• Improvements to digital self-serve flows.
• Simplification of hardship forms.
• Reduction in repeat contact requirements.

Supervisory review may focus on whether firms proactively assess and refine customer journeys.

8.4 Communications Governance Evidence

Demonstrating Consumer Understanding

An evidence pack may include:

• Communication templates (letters, emails, SMS, scripts)
• Frequency cap rules.
• Channel sequencing logic.
• QA sampling results.
• Evidence of supportive-language standards.
• Data on debt advice signposting rates.
• Adviser response SLAs.

Firms should be able to show that communication strategy is monitored and adjusted where outcomes are poor.

8.5 Outcomes Monitoring and MI Dashboards

Demonstrating Ongoing Oversight

The evidence pack should include:

• KPI dashboards aligned to Consumer Duty themes.
• Segmented outcome analysis.
• Trend data over time.
• Records of management review.
• Remediation logs where issues were identified.

Supervisory focus may include whether:

• Data is sufficiently segmented.
• Outcome gaps are recognised.
• Remedial actions are tracked to completion.
• Subsequent improvement is assessed.

Documented “before and after” evidence strengthens credibility.

8.6 Vulnerability Oversight Documentation

Demonstrating Tailored Support

Firms should maintain evidence of:

• Vulnerability identification processes.
• Training materials for frontline staff.
• Reasonable adjustment frameworks.
• Outcome comparison between vulnerable and non-vulnerable cohorts.
• Governance review of vulnerability outcomes.

Embedding is demonstrated not by the existence of a vulnerability policy, but by evidence that outcomes are monitored and improved.

8.7 Breathing Space Records (Where Applicable)

Demonstrating Compliance with Legal Protections

Firms should be able to evidence:

• Timely suppression of contact.
• Accurate application of interest and fee freezes.
• Correct restart procedures.
• Audit logs for each case.
• Third-party suppression cascade.

Given the statutory nature of the scheme, accuracy and auditability are essential.

8.8 Third-Party Oversight Documentation

Demonstrating Retained Accountability

Where arrears functions are outsourced, firms should maintain:

• Due diligence records.
• Contracts embedding Consumer Duty standards.
• Supplier MI reports.
• QA results.
• Issue logs and remediation evidence.
• Governance review records.

Supervisory scrutiny may focus on whether firms can demonstrate effective oversight rather than reliance on contractual wording alone.

8.9 Proportionality in Evidence Preparation

The FCA has recognised that firms differ in size and complexity.

Accordingly:

Smaller firms may demonstrate embedding through:

• A structured but concise evidence folder.
• Clear governance minutes.
• A focused KPI dashboard.
• Documented corrective actions.

Larger firms may require:

• Centralised evidence repositories.
• Structured audit trails.
• Formalised Consumer Duty embedding reports.
• Cross-functional review documentation.

The key question is whether the firm can clearly articulate and evidence:

• What good outcome means.
• How it is monitored.
• How weaknesses are addressed.
• How embedding is sustained

9. How to Embed FCA Consumer Duty in Arrears Management: A 90-Day Action Plan

Embedding the Consumer Duty in arrears operations does not require wholesale redesign overnight. It requires structured review, prioritisation and documented improvement.

The following 90-day framework provides a proportionate starting point for firms assessing and strengthening embedding in arrears management.

This framework can be scaled according to firm size, complexity and risk exposure.

Phase 1 (Days 0–30): Diagnose and Map

The objective of this phase is to establish a clear view of current state embedding.

Firms should:

• Document end-to-end arrears pathways.
• Identify entry and exit points.
• Map digital and assisted journeys.
• Highlight escalation triggers.
• Identify points of customer friction.

The aim is to understand how customers experience arrears in practice — not how policies describe it.

Firms should articulate:

• What sustainable resolution means.
• How vulnerability should influence treatment.
• What fair treatment looks like in operational terms.
• What unacceptable outcomes would look like.

This definition becomes the foundation for KPI design.

Firms should assess:

• What metrics are currently tracked.
• Whether metrics focus on activity or outcomes.
• Whether segmentation exists (e.g. vulnerability, product, stage)
• Where outcome gaps may already be visible.

Where data gaps exist, these should be prioritised for development.

Initial review may identify areas requiring urgent attention, such as:

• High re-default rates.
• Excessive contact volumes.
• Vulnerability outcome gaps.
• Weak Breathing Space controls.
• Inconsistent third-party oversight.

Immediate remediation steps should be documented.

Governance output for Phase 1:

• Current-state assessment summary,
• Agreed priority areas,
• Defined outcome framework.

Phase 2 (Days 31–60): Strengthen Controls and Monitoring

The objective of this phase is to address identified gaps and formalise embedding mechanisms.

Firms should:

• Document their solution ladder clearly.
• Align forbearance pathways with affordability principles.
• Clarify escalation criteria.
• Ensure vulnerability adjustments are embedded operationally.

Based on Phase 1 findings, firms should:

• Introduce or refine sustainable outcome metrics.
• Implement segmented monitoring where absent.
• Define review cadence.
• Assign ownership for KPI oversight.

Where possible, trend analysis should be introduced to detect deterioration early.

Firms may consider:

• Reviewing frequency caps.
• Testing clarity of hardship messaging.
• Assessing digital self-serve usability.
• Reviewing debt advice signposting consistency.

Adjustments should be logged and tracked.

This may include:

• Testing Breathing Space suppression processes.
• Reviewing vulnerability case-handling consistency.
• Conducting QA sampling of third-party communications.
• Validating interest and fee application logic.

Governance output for Phase 2:

• Updated policies where required.
• Revised KPI dashboard.
• Control enhancement log.
• Documented oversight review.

Phase 3 (Days 61–90): Review, Test and Embed

The objective of this phase is to demonstrate active embedding rather than static compliance.

Firms should:

• Review KPI trends.
• Identify outcome gaps.
• Compare vulnerable vs non-vulnerable results.
• Assess treatment durability.
• Review complaint themes.

Findings should be formally documented.

Where weaknesses are identified, firms may:

• Adjust treatment thresholds.
• Refine contact sequencing.
• Expand specialist support capacity.
• Improve digital journey clarity.
• Revise affordability assessment thresholds.

Changes should be proportionate and evidence based.

By the end of 90 days, firms should be able to demonstrate:

• Defined good outcomes.
• Segmented KPI monitoring.
• Governance review records.
• Corrective actions taken.
• Updated control documentation.

This creates a foundation for supervisory engagement readiness.

Summary

1. Proportionality Considerations

Smaller firms may complete this framework through:

• A focused internal workshop.
• Simplified dashboards.
• Structured management meeting records.
• Targeted policy updates.

Larger or more complex firms may require:

• Cross-functional embedding programmes.
• Data system enhancements.
• Dedicated Consumer Duty oversight committees.
• Formalised remediation tracking systems.

The key is not speed of implementation but clarity of direction and evidence of action.

2. Embedding Is Ongoing

The FCA’s focus on embedding indicates that Consumer Duty is not a one-time exercise.

Firms should view this 90-day framework as:

• A catalyst for structured improvement.
• A baseline for future reviews.
• A mechanism to demonstrate responsiveness to emerging harm.

Periodic reassessment should form part of ongoing governance cycles.

3. Final Reflection

By following a structured, proportionate and evidence-based approach, firms can demonstrate that arrears operations:

• Deliver sustainable outcomes.
• Monitor and address harm.
• Support vulnerable customers.
• Align with supervisory expectations.
• Embed Consumer Duty in practice rather than in principle alone.

Key Takeaways

• FCA Consumer Duty in arrears requires firms to evidence customer outcomes, not simply demonstrate policy compliance.
• Sustainable repayment and reduced re-default should be measured alongside traditional collections KPIs.
• Outcomes should be segmented to identify whether vulnerable customers or other cohorts experience poorer results.
• Arrears journeys and communications should remove unreasonable barriers and support consumer understanding.
• Firms should be able to show the FCA what they learned from outcomes monitoring and what they changed as a result.

Ready to strengthen your Consumer Duty approach to arrears?

Talk to an EXUS expert to explore how your collections operation can improve outcomes monitoring, customer journeys and treatment strategies while building stronger evidence of Consumer Duty in practice.