The U.K.’s Financial Conduct Authority (FCA) and the U.K. Financial Ombudsman Service are proposing a series of reforms to modernize the investor dispute resolution system, avoid delays in client compensation and provide greater certainty to industry firms.
The regulator launched a joint consultation this week with the ombudservice proposing reforms designed to ensure greater consistency in how regulations are interpreted, introduce a process for identifying novel and potentially systemic issues that can clog the existing system, and provide enhanced guidance to help firms identify and report these issues to the FCA more quickly.
The proposed changes are intended to help firms resolve problems before complaints spike and to give industry firms greater certainty.
“Currently, the majority of complaints are resolved by firms and the redress system works well for individual cases that come to the Financial Ombudsman. But high volumes of complaints on specific or novel issues can jam the system and cause significant delays,” the regulator noted.
Alongside the regulators’ consultation, the HM Treasury also published a consultation proposing certain legislative changes. These include amendments to the “fair and reasonable” test in complaint-handling rules, a 10-year limitation period for referring complaints to the ombudsman, a dedicated referral mechanism for systemic issues and more tools for the FCA to manage systemic events.
“These reforms mark a significant step in modernizing the U.K.’s redress system, making it more agile and responsive and a much better fit for today’s economy. Our changes will bring consistency and predictability for businesses and consumers, enabling us to better focus on our core purpose — resolving individual disputes quickly and with minimum formality,” said James Dipple-Johnstone, interim chief ombudsman at the Financial Ombudsman Service, in a release.
“When something goes wrong, it is right that people are compensated. But a lack of certainty in the financial redress system can hold back investment and innovation,” said Sarah Pritchard, deputy chief executive at the FCA, in a release.
“Our changes will help create a system that is more predictable for firms and gives consumers quick and fair compensation where they’re owed it, supporting U.K. growth,” she added.
The consultation runs until Oct. 8.
The FCA aims to implement its reforms in the first half of 2026.