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The UK’s redress landscape is undergoing one of its most significant evolutions in years. With the publication of CP26/9, the Financial Conduct Authority (FCA) and Financial Ombudsman Service (FOS) are jointly consulting on proposals intended to enhance predictability, transparency and efficiency across the system. Their ambition is clear: a redress framework that delivers faster, more consistent outcomes for consumers, while giving firms greater clarity and confidence in how potential failings should be identified, escalated and resolved. [fca.org.uk]
This blog looks in depth at what the changes are, how they fit together, and why they matter.
Why Reform Now?
Both regulators acknowledge that the current redress regime can generate uncertainty for firms, investors and consumers, particularly where expectations around reporting, evidence standards, and adjudication criteria are unclear. The FCA’s strategy highlights the need for earlier intervention by firms, as well as more consistent processes within the redress framework. The consultation follows years of feedback, including a joint Call for Input and earlier consultations dating back to 2024 and 2025.
The wider context is also important: the Treasury’s review of the FOS found that while the Ombudsman remains critical to the UK’s financial regulatory system, reforms are needed to strengthen collaboration with the FCA and to ensure the FOS avoids operating as a “quasiregulator”. This consultation is therefore part of a wider move to restore clarity of roles across the regulatory ecosystem.
Key proposals: what’s changing in detail
1. A new complaint registration stage at the FOS
One of the headline reforms is the proposed creation of a pre-investigation registration stage at the FOS. This is a structural shift, aiming to ensure that only complaints that are genuinely ready and within the Ombudsman’s jurisdiction proceed into full investigation.
During this stage, the FOS would assess:
- whether the complaint is in scope,
- whether the consumer has provided sufficient evidence, and
- whether the firm has already had the opportunity to respond.
This change has several implications. For firms, it offers an incentive to ensure initial complaint handling is robust; an incomplete or poorly evidenced submission is less likely to progress. For consumers, it may reduce disappointment associated with complaints being dismissed later in the process. For the FOS itself, it should create a more manageable pipeline, reducing investigation backlogs and improving the speed of resolution. It will mean that firms will need to change their approach to dealing with cases going to FOS. Getting on the front foot at this new stage will be crucial in delivering a more effective and efficient complaints handling process.
2. Updates to dismissal powers
The FOS is proposing to modernise and expand its dismissal grounds, reinstating some pre2015 powers and creating clearer criteria for filtering out cases unlikely to benefit from Ombudsman review.
These new dismissal powers may apply when:
- the complaint has limited prospect of success,
- the matter is more suitable for a court or alternative forum,
- or the case lacks sufficient supporting information.
This is designed to ensure resources are concentrated on viable, well-formed complaints. It may reduce perceived inconsistencies in how borderline cases are handled, which has been a longstanding criticism from firms and consumer advocates alike.
3. Revamping the “fair and reasonable” test
Arguably one of the most consequential proposals is the revision to the fair and reasonable test, the backbone of Ombudsman decision making. The proposed change would emphasise assessing firms’ actions based on standards and rules applicable at the time the event occurred, rather than drawing on broader notions of later “good industry practice”.
This shift addresses a common concern among firms: the possibility of retrospective reinterpretation. By anchoring assessments in the regulatory environment of the time, the FOS can bring greater predictability to its decisions without reducing consumer protections.
For consumers, this is still a protective approach—decisions will remain principles based, but greater clarity benefits everyone involved.
4. Strengthened SUP 15 reporting guidance
The FCA is proposing a major expansion of its expectations around SUP 15 notifications, with guidance clarifying when firms should report emerging issues that may ultimately give rise to redress.
Accompanying this is the publication of good and poor practice examples, designed to help firms improve their early warning systems and internal escalation frameworks.
This guidance aligns with the FCA’s broader focus on proactive intervention, encouraging firms to identify issues early, before they affect large numbers of customers. Improved early reporting may reduce the incidence of mass redress events and help ensure consumer harm is mitigated sooner.
This is intended to address the risk of mass redress schemes being required long after the events in question have happened. Whether this will work in practice very much remains to be seen but there is a clear desire from all concerned that there be fewer mass redress schemes required in future.
5. Enhancements to FOS and FSCS process efficiency
To support more efficient case handling, the FCA is proposing targeted rule changes within both the FOS framework and the Financial Services Compensation Scheme (FSCS). These include:
- changes to DISP that reinforce good practice without disproportionately burdening firms, and
- updates to the FSCS Compensation Sourcebook enabling FSCS to determine firm default even when a firm is not cooperating.
The aim is to remove operational bottlenecks that currently lead to elevated costs and slower outcomes—costs that ultimately fall on firms through levies.
How these reforms fit together
Taken together, the reforms represent a meaningful shift toward a redress system that encourages earlier intervention, filters complaints more effectively, offers clearer decision-making standards, and operates with greater overall efficiency. Each proposal has been designed to complement the others, creating a more coherent and predictable framework.
Clearer expectations under SUP 15 mean that firms should be able to spot emerging issues sooner, reducing the likelihood of largescale or systemic problems developing unnoticed. When complaints do arise, the new registration stage at the Financial Ombudsman Service ensures they are properly evidenced and genuinely suitable for review before progressing further. This, in turn, is reinforced by updated dismissal powers that help prevent prolonged consideration of cases that are not appropriate for Ombudsman involvement.
The revised “fair and reasonable” test also plays a key role by grounding decisions firmly in the regulatory standards that applied at the time of the events in question, giving firms greater certainty about how their past actions will be judged. Meanwhile, the enhancements to FSCS processes help reduce friction in situations where firms fail or refuse to cooperate, smoothing the path for consumers seeking compensation.
Together, these interconnected reforms create a more responsive and structured redress ecosystem—one that aims to deliver faster outcomes, greater consistency, and a clearer regulatory journey for everyone involved.
What this means for firms and consumers
- Greater clarity on expectations should support more confident risk management and investment decisions.
- Earlier reporting obligations may require strengthening internal controls.
- Changes to the fairness test reduce concerns about retrospective reinterpretation.
- Faster, more predictable complaint journeys.
- Clearer expectations around what evidence is required.
- More consistent outcomes across similar cases.
- Better coordination between the FCA and FOS.
- Reduction in the volume and severity of mass redress events.
- Greater overall system stability.
Next steps
The consultation on CP26/9 is open until 11 May 2026, after which the FCA and FOS intend to publish further policy statements later in the year.
Given the scope and depth of these proposed reforms, industry engagement will be critical. Firms should consider not only how to respond to the consultation but how to prepare operationally for a more proactive, transparent and standards aligned redress framework. In particular the proposed registration stage will change the way firms engage with FOS and a proactive approach will be needed to ensure that complaints with little merit do not progress. Firms will need to be strong in pushing these outcomes before cases progress and fees rise.
James Tattersall
Director of Advisory Services
30+ years’ financial services experience in customer service, remediation, and governance, ensuring efficient, regulatory compliant outcomes.