Context
The FCA and FOS are seeking to modernise the financial redress system to help prevent it becoming overwhelmed, delaying consumer compensation. Consultation Paper CP25/22 “Modernising the redress system” has been published accordingly.
Key points to note and next actions
Currently, the majority of complaints are resolved by firms, and the redress system works well for individual cases that are referred to FOS. However, high volumes of complaints on specific or novel issues can jam the system and cause significant delays.
The proposed changes will help firms identify and resolve issues before complaints escalate and aim to give greater predictability. This is cited as another example of an intervention to give businesses more “…confidence to invest, innovate and support UK growth”. The proposals include:
- Improving how the FCA and FOS work together to ensure consistency in the interpretation of regulations. This includes a new referral process to improve transparency about regulatory alignment and a lead complaint process to look at novel and significant complaint issues as they emerge.
- Clearer guidance for firms on reporting issues to the FCA sooner, alongside good practice examples to help identify and resolve complaints.
- Guidelines to help industry assess and trigger the need to resolve a situation with wider implications that could spike complaints.
- Changes to the way the Financial Ombudsman processes complaints to ensure they are well-evidenced and ready before an investigation begins.
The FCA and FOS are asking for comments on this Consultation by 8th October 2025