Creating a redress system that works better for consumers and firms
Executive Summary
The FCA, in collaboration with the Financial Ombudsman Service (FOS) and the Government, has announced modernization of the UK's financial redress system to accelerate consumer compensation and provide firms with greater regulatory clarity. This initiative represents a fundamental shift in how complaints are registered, assessed, and resolved, with immediate implementation underway within existing FCA powers and broader legislative reforms planned.
What Changed
The redress system modernization introduces several structural and procedural reforms: Registration Stage for Complaints A new formal registration stage has been introduced to standardize how complaints enter the system, improving tracking and early identification of systemic issues across firms and markets. Updated Dismissal Grounds The FCA has revised the criteria for dismissing complaints, providing clearer standards that should reduce disputes about complaint admissibility and improve consistency in decision-making. Enhanced Fair and Reasonable Test Guidance Clearer guidance on how the "fair and reasonable" test applies in individual cases aims to reduce ambiguity and support more predictable outcomes. Harm Assessment Framework The FCA has expanded its approach to assessing potenti
What You Need To Do
- *Immediate Operational Priorities (Pre-May 2026)
- *Governance and Accountability
- Appoint senior managers with explicit accountability for complaints handling and redress programmes
- Establish board-level oversight structures with regular reporting on complaints volumes, redress calculations, and regulatory compliance
- Document decision-making frameworks for complaint eligibility and dismissal grounds
- *Systems and Process Design
Key Dates
Compliance Impact
Urgency: CRITICAL
Who is Affected
Summary
We’ve reached a significant milestone in our joint work with the Financial Ombudsman Service and the Government to modernise the redress systemso that consumers get fair outcomes quicker and firms have greater clarity about how issues will be handled.We’re delivering change at speed by acting now within our current powers, with a focus on improving how the system works in practice. This includes a new registration stage for complaints, updated dismissal grounds and clearer guidance on the fai...