The UK Financial Conduct Authority (FCA) and the UK Financial Ombudsman Service (FOS) have published a joint consultation paper setting out proposed reforms to the redress framework, aimed at improving predictability and consistency of outcomes, strengthening firms’ responsibilities to identify and remediate harm, and enabling earlier, more orderly management of mass redress events. The package includes proposals to assess potential mass redress events against a six-criteria framework, and to clarify in FCA Handbook guidance (SUP 15) when firms are expected to notify the FCA of serious redress risks, including where an issue affects more than 40% of consumers in an affected product or service line, could lead to redress above GBP 10m or 50% of annual revenue from the affected line, or implies average losses above GBP 10k per consumer. It also covers operational and process changes around complaint handling and regulatory alignment, including updated FCA-FOS coordination in the Memorandum of Understanding, a proposed FOS “lead complaints” process for novel and significant issues (with the ability to pause related cases), and a new “registration” stage intended to ensure complaints are ready and appropriate for investigation before becoming chargeable. Draft FCA Handbook changes would, among other amendments, require firms’ complaint acknowledgements to state the applicable deadline for a final response and clarify expectations on firms’ cooperation with the FOS, while proposed Compensation Sourcebook changes seek to improve Financial Services Compensation Scheme efficiency through simplified eligibility provisions, broader default-determination powers, more flexibility over where compensation is paid, and a revised approach to settling claims without full investigation where reasonable. Responses are requested by 8 October 2025, with the FCA aiming to publish a policy statement in H1 2026 setting out final decisions and implementation periods; the FCA and FOS will share consultation responses with HM Treasury to support its parallel review.
Financial Conduct Authority 2025-07-15
UK Financial Conduct Authority and UK Financial Ombudsman Service launch consultation to modernise the redress system and mass redress handling
The UK Financial Conduct Authority and the UK Financial Ombudsman Service propose reforms to enhance predictability, consistency, and firm accountability in mass redress events. Key proposals include a six-criteria assessment framework, updated FCA Handbook guidance, and changes to complaint handling. The reforms also aim to improve Financial Services Compensation Scheme efficiency through simplified eligibility and broader default-determination powers.