The regulatory landscape for financial services firms continues to evolve.
Political pressure to promote growth is increasing, yet firms must still demonstrate their full commitment to the FCA’s Consumer Duty. At the same time, they are expected to deliver good customer outcomes through outcomes-based regulation shaped by shifting expectations, new supervisory approaches and a growing emphasis on data-led oversight.
On one hand, firms still hear messages about easing regulatory burdens and reducing unnecessary reporting. On the other, they are experiencing a clear rise in targeted evidence requests and an FCA that expects them to be ready at any moment to demonstrate how they are consistently delivering, measuring and monitoring good consumer outcomes on an ongoing basis.
This topic formed the backdrop to our recent webinar on evidencing compliance, where the theme that emerged above all others was the maturing regulatory model, shifting to evidence based and data-driven insights as part of the regulator’s rebalancing risk for growth exercise.
Mixed signals but a clear direction
Throughout the webinar, we ran three polls. The first revealed the mood across the industry. Despite recent political messaging, when asked “In the changing regulatory environment, how are you feeling about the evidence and reporting obligation?” the largest proportion of participants (42%) said they believed the regulatory environment was unlikely to change significantly in the near term. A further 25% expected Consumer Duty to continue increasing the burden, suggesting that many in the industry feel the higher standards introduced by the Consumer Duty are here to stay. A smaller, but still important, group (8%) expressed uncertainty about what lies ahead.
While the messages from the FCA may sometimes appear softened, the substance of activity tells a different story. The regulator is continuing to push forward with an outcomes-focused, data-first, evidence-driven model of supervision, using tools such as the S165 mandatory information request and targeted data requests to build a more detailed picture of firms’ real-world practices.
The growing significance of evidence
What has changed most over the two years of the Consumer Duty is not the intention behind regulation but the standard of proof that firms are now expected to maintain. The FCA’s shift from prescription to what it terms “principles with proof” places the responsibility for demonstrating good outcomes squarely on firms’ shoulders.
Across the industry, this is exposing long-standing evidential gaps. Record-keeping inconsistencies, missing audit trails and incomplete documentation continue to cause friction, particularly when firms attempt to evidence standard activities such as annual reviews or vulnerability assessments. Even where the right thing has happened, the absence of a paper trail can create risk.
This reality became even clearer during our second poll, which explored how many customer conversations are being recorded and assessed by participating firms. The responses reflected the sector’s fragmentation. While some firms are now reviewing more than ten percent of interactions (17%), which is significantly higher than the historic norm, a substantial portion still do not record every conversation (30%) and many assess only a small fraction of those they do capture (35%).
Although the value of evidence is well understood, the practical ability to generate it consistently is far from widespread according to our poll results.
A confidence gap in outcome testing
One of the most revealing themes emerged from our third poll, where participants were asked to identify what they could evidence across their most recent customer outcomes. On the surface, confidence appeared high. All respondents stated that they could verify vulnerability checks, and a large majority felt confident in demonstrating appropriate treatment and customer understanding (82%).
Yet beneath this confidence lay clear fragilities. Only around half of participants reported that all their customer conversations were recorded (53%) – a fundamental building block for evidencing understanding, support and fair value. Even fewer (41%) could demonstrate the total absence of detriment across recent journeys. And while many believed they could evidence understanding, only a minority used post-interaction surveys, which remain among the most reliable tools for capturing genuine comprehension.
Taken together, the responses suggest a sector that feels directionally confident but operationally stretched. Firms believe they can find the evidence if required, but whether that evidence is accessible, consistent or complete across every journey is another matter.
Why manual processes can’t meet modern standards
This gap between aspiration and operational reality is unsurprising. Traditional outcome testing relies heavily on manual sampling and most compliance teams simply do not have the capacity to review customer interactions at a statistically meaningful level. Even when call recordings or documents exist, the work required to analyse them can be prohibitive.
This is why technology and specifically predictive AI, is becoming central to evidencing compliance. Unlike generative tools, predictive models are designed to find patterns, detect missing steps and surface potential issues across entire populations of interactions. When used to triage conversations and files, AI enables firms to focus their human reviewers where they are genuinely needed, while still achieving scale, consistency and depth.
In practice, this means compliance functions can finally move beyond low-volume sampling and towards true population-level insight, without requiring a dramatic increase in headcount.
The future of regulation Is evidence-ready
Across the webinar, one conclusion became clear: firms are entering a period where evidential readiness is not just a regulatory expectation but a core operational capability. Being able to demonstrate that the right conversations took place, that customers understood the information provided and that good outcomes were achieved – rather than simply avoiding harm -is now essential.
The poll results reflected a nuanced picture: progress is being made, ambition is increasing but gaps remain particularly in turning good intentions into robust, easily retrievable evidence. For firms that invest now in technology, data quality and intelligent sampling techniques, the shift to “show me, don’t tell me” becomes not just achievable but advantageous. These firms will be able to not only gain the operational efficiencies achieved through AI but also respond confidently to regulatory scrutiny, make better decisions internally and deliver genuinely better customer outcomes.
Strengthen your evidencing capabilities
Whether you need clarity on your ongoing Consumer Duty MI matrix or the ability to evidence outcomes at scale, TCC and Recordsure can help. TCC’s regulatory experts work with you to assess your current approach, identify gaps and benchmark your processes against best practice. And with Recordsure’s AI technology, you can analyse every interaction, surface risk and build a robust evidential framework without increasing headcount.
