17. March 2026
FCA Redress Reform Programme: FCA Consultation Paper CP26/9 and Associated Measures
Regulatory Briefing Note No. 2/26 - March 2026
Audience: Insurance Brokers, Managing General Agents (‘MGAs’) and Claims Management Companies
Executive Summary
The Financial Conduct Authority (FCA), working alongside the Financial Ombudsman Service (FOS), has launched a programme to modernise the UK redress framework.
This programme should not be viewed as a single consultation in isolation. Rather, it forms part of a broader regulatory strategy aimed at strengthening how consumer harm is identified, escalated and remedied across financial services.
The strategy is built around three interconnected regulatory pillars:
- Finalised Guidance FG26/2, guidance on identifying, escalating and rectifying consumer harm.
- Clarification of FCA SUP 15 Reporting Expectations; new guidance clarifying when firms should notify the FCA about emerging issues that may lead to redress.
- Proposed Rule Changes to the Redress Framework; including reforms affecting the Financial Ombudsman Service (‘FOS’) complaints process and redress mechanisms.
The proposals are set out in Consultation Paper CP26/9: Modernising the Redress System, with consultation responses due by 11 May 2026.
Taken together, these measures represent a significant shift in regulatory expectations. Complaint handling and redress governance are increasingly being treated as core indicators of Consumer Duty compliance and systemic consumer risk.
The FCA’s Redress Reform Strategy
The FCA’s modernisation programme is intended to create a redress framework that delivers:
- faster resolution of complaints;
- earlier identification of consumer harm;
- greater predictability for firms; and
- improved outcomes for consumers.
Rather than relying primarily on complaints reaching the Financial Ombudsman Service, the FCA is seeking to encourage firms to identify and address issues earlier within their own governance frameworks.
The strategy therefore focuses on strengthening:
- harm detection;
- escalation and regulatory reporting;
- remediation processes; and
- complaints resolution mechanisms.
Pillar 1: Finalised Guidance FG26/2
Identifying and Rectifying Consumer Harm
The FCA has published FG26/2 https://www.fca.org.uk/publication/finalised-guidance/fg26-2.pdf , which provides guidance on good and poor practice when firms identify potential consumer harm.
The guidance emphasises that firms should:
- actively monitor customer outcomes;
- identify systemic issues affecting groups of customers;
- investigate recurring complaint themes; and
- undertake remediation exercises where necessary.
The FCA’s message is clear: firms should not wait for individual complaints to escalate before considering whether broader harm may exist.
Where firms detect patterns indicating customer detriment, they are expected to assess whether proactive remediation is required.
This guidance aligns closely with expectations under the Consumer Duty, particularly around the obligation to act to deliver good outcomes and to address foreseeable harm.
Pillar 2: SUP 15 Guidance Clarification
Reporting Emerging Issues to the FCA
Alongside the new guidance on harm identification, the FCA has clarified expectations under SUP 15 regarding when firms should notify the regulator about emerging redress issues.
The FCA expects notification where issues may:
- affect a significant proportion of customers
- lead to large-scale remediation exercises
- generate significant financial redress liabilities
- threaten financial resilience
- result in an unusually high number of complaints
- cause significant consumer detriment.
This clarification reinforces the expectation that firms must escalate potential systemic harm before it develops into large-scale consumer detriment or mass redress events.
For firms operating large customer portfolios, early detection and escalation will therefore become increasingly important.
Pillar 3: Rule Changes to the Redress Framework
The third pillar of the FCA’s strategy consists of proposed rule changes affecting how complaints and redress are handled across the regulatory system.
These include proposals intended to improve efficiency and predictability within the Financial Ombudsman Service.
Key proposals include:
- introducing a complaints registration stage before cases are allocated to investigators
- updating aspects of the “fair and reasonable” test
- expanding grounds for complaint dismissal
- improving operational coordination between the FCA, FOS and the Financial Services Compensation Scheme.
The intention is to ensure that complaints reaching the Ombudsman are within scope, properly evidenced and ready for investigation, thereby reducing delays and improving consistency of outcomes.
Implications for Insurance Brokers
For insurance brokers, the reforms strengthen expectations around complaints, governance and Consumer Duty monitoring.
Operational implications include:
- Enhanced complaints analytics
Firms will need to demonstrate effective use of:
- complaints management information
- root-cause analysis
- thematic complaint reviews.
Complaint data is increasingly viewed by the FCA as a leading indicator of customer harm.
- Proactive remediation
Where brokers identify systemic issues (for example relating to product suitability, disclosure failures or premium finance arrangements), firms may be expected to undertake remediation without waiting for complaints to arise.
- Greater predictability in Ombudsman decisions
Government reforms to the Financial Ombudsman framework may improve predictability where firms have demonstrably complied with relevant FCA rules.
However, firms must still demonstrate that they are delivering fair customer outcomes, not merely technical regulatory compliance.
Implications for Managing General Agents (MGAs)
MGAs may face particularly significant implications due to their role in product design, underwriting governance and distribution oversight.
The proposals heighten expectations that MGAs can:
- monitor complaint patterns across distribution partners
- identify systemic issues affecting product portfolios
- coordinate remediation across delegated partners.
Where redress issues arise across an entire product line or scheme, MGAs will need to ensure appropriate governance escalation and remediation frameworks are in place.
Complaints management will therefore become an increasingly important component of product governance and Consumer Duty monitoring.
Implications for Claims Management Companies
The proposals may also alter the operating environment for claims management companies (‘CMCs’).
The introduction of a complaints registration stage within the Financial Ombudsman Service process is intended to ensure that complaints:
- fall within jurisdiction
- contain sufficient evidence
- are ready for investigation.
This may increase scrutiny of poorly evidenced or speculative claims.
CMCs operating high-volume complaint models may therefore encounter greater operational friction, while firms providing well-prepared and well-evidenced submissions may continue to operate effectively.
Consumer Duty Considerations
The FCA has explicitly aligned the redress reforms with the Consumer Duty framework.
Complaint handling, redress decisions and remediation exercises are increasingly being treated as evidence of whether firms are delivering the Duty’s four outcomes:
- Products and services.
- Price and value.
- Consumer understanding.
- Consumer support.
Firms will therefore need to demonstrate that complaint trends and redress outcomes are actively monitored as part of Consumer Duty governance and reporting.
Customers in Vulnerable Circumstances
The FCA has emphasised that the redress framework must work effectively for customers with characteristics of vulnerability.
Firms should therefore ensure that complaint processes:
- remain accessible and easy to navigate;
- provide additional support where appropriate; and
- do not create barriers to redress for vulnerable customers.
Firms should also assess whether systemic issues disproportionately affect vulnerable consumers and ensure remediation approaches reflect this.
Strategic Observation
Taken together, the FCA’s redress reforms represent a shift in regulatory philosophy.
Complaints are no longer viewed solely as dispute resolution mechanisms. They are increasingly being used by regulators as early warning signals of systemic consumer harm.
For insurance firms, the implication is clear.
Complaints governance, redress frameworks and vulnerability processes are becoming central components of regulatory risk management and Consumer Duty compliance.
Conclusion
The FCA’s redress reform programme represents a coordinated strategy aimed at strengthening the UK consumer protection framework.
By combining:
- clearer guidance on identifying harm
- stronger expectations around regulatory escalation
- reforms to the complaints resolution process
the FCA is seeking to encourage earlier identification and remediation of consumer detriment.
Insurance brokers, MGAs and claims management companies should therefore review their complaints frameworks, escalation processes and remediation governance in light of the consultation.
Further policy developments are expected following the consultation closing on 11 May 2026.
The small print...
This document has been prepared by AJG Regulatory Solutions for the purpose of contributing to regulatory discussion and consultation. The views expressed in this response represent the professional opinions of AJG Reg Solutions based on our regulatory expertise and experience supporting firms operating in the financial services sector.
Unless explicitly stated otherwise, the views set out in this document do not represent the views of any individual client of AJG Reg Solutions. Any examples or references to market practice are provided for illustrative purposes only and should not be interpreted as referring to any specific firm.
This response is provided in good faith for the purposes of regulatory engagement and policy development. It should not be relied upon as legal advice, and readers should seek appropriate professional advice in relation to their specific circumstances.
AJG Reg Solutions accepts no responsibility or liability for any loss arising from reliance on the contents of this document. Information contained in this response may be shared publicly by the relevant authority as part of its consultation process unless otherwise indicated.