Essentially, its purpose is to improve the dispute resolution system for both firms and consumers.

And it highlights a clear shift in expectations for firms to identify issues earlier, act faster, and take greater ownership of customer outcomes.  

The goal? A more efficient, consistent, and proactive redress system that reduces lengthy complaints processes and focuses on better outcomes for consumers.

In other words, the regulator wants firms to continue to embody Consumer Duty in all areas, including redress.

We have, of course, taken a deep dive into the paper! So here’s what the FCA’s CP26/9 means for firms.

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What does CP26/9 cover?

The proposed reforms focus on improving how complaints and compensation are handled across firms and the Financial Ombudsman Service (FOS).  

The consolidation proposes:

• Earlier identification and escalation of issues, helping firms address problems before they escalate

• Stronger alignment between the FCA and FOS, reducing inconsistency in outcomes

• A new complaint “registration” stage to support quicker triage and resolution

• Enhanced powers to dismiss unsuitable cases, improving efficiency across the system

Alongside this, the FCA is taking steps to clarify expectations, particularly around the “fair and reasonable” test, and streamline processes to reduce delays and better manage complaints.

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What do advice firms need to do?

Throughout the paper, the message is clear: firms should resolve issues early and take a proactive approach to identify and address customer harm, to prevent them escalating into formal complaints or systemic remediation exercises.  

Firms should continue to monitor MI data and any trends in order to horizon scan for any potential issues signalling a move away from reactive, complaint-led processes towards ongoing monitoring and early intervention.

Once an issue has been identified, firms are expected to assess if remedial action is appropriate, and what redress looks like, considering the scale of the issue, and how to ensure customers be receive good outcomes in light of it.

In short:

• Resolve issues early

• Take a proactive approach to identify and address customer harm

• Monitor MI data and respond to potential issues ahead of time

• Where issues are identified, assess if remedial action is appropriate  

In practice, this could mean firms not just providing financial redress where customers have suffered a loss but also implementing system or process improvements where harm is minimal or operational in nature.

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Key takeaways

The regulator’s main emphasis is on taking a reasonable, proportionate, and well-evidenced approach to redress, which requires strong internal governance to ensure that risks or systemic issues are identified early.  

Firms that invest now in data, governance, and proactive remediation frameworks will be better placed to meet these expectations and reduce the risk of large-scale issues developing in the future.

As always, our expert compliance team are here to help. If you have questions about how the FCA approach to redress may affect your firm, or need guidance ensuring that your data, governance and frameworks are up to the job, book a call now. We love to chat!

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