‘Modernising the redress system’: key changes to processes at the FOS

The FOS has confirmed that it will introduce the pre-registration and registration stages for complaints as it had proposed in the CP 26/9 consultation.  In short, these will allow it to assess newly referred complaints, obtain missing information, conduct case management work, and assess its own jurisdiction and dismissal grounds, before the complaint progresses to investigation.  The aim is to improve efficiency and create a clearer point at which complaints are considered ‘ready for investigation’.  Once it has passed through these stages, and the FOS has jurisdiction, a complaint will go forward for full consideration by a caseworker.

The FOS reported that those responding to the consultation had identified broad support for these changes, but in some cases (particularly from consumer groups) the support was conditional on ensuring the new processes improve efficiency without creating additional barriers to using the service.  Concerns were expressed over the ability of vulnerable and non-advised customers to access the service.

These changes will not take effect immediately.  The FOS has indicated that it will pilot the changes in fraud and scam complaints in October 2026, however no amendments to relevant rules have yet been published.  The FOS has indicated that it will publish more guidance on the new pre-registration / registration approach in due course.

The FOS has also confirmed that it will proceed with amended grounds for dismissing complaints without investigation.  The Policy Statement contains a series of amendments to FCA rules in DISP 3.  There is some detail to the changes, but in summary they include a combination of introducing some new grounds for dismissal, reintroducing some that historically existed in FCA rules until 2015 (but were removed at the time due to the implementation of EU legislation that no longer applies now), and clarifying and expanding some existing grounds. 

In short, for complaints referred to the FOS after 1 October 2026, the FOS will have:

• a new power to dismiss a complaint where the complainant has acted vexatiously, abusively, and/or otherwise unreasonably in engaging with the FOS (but on the proposed new drafting of DISP, not with the respondent firm).  This new ground of dismissal will operate alongside the FOS’s unreasonable behaviour policy, and will supplement the existing ground that allows the FOS to dismiss where a complaint itself is frivolous or vexatious;
• expanded powers to dismiss a complaint, not only where (as now) the subject matter of the complaint has been dealt with, or is being dealt with, by a comparable complaints scheme, but in a wider range of circumstances where the subject matter is being dealt with by a regulatory or law enforcement body or another dispute resolution process;
• an amended power to refer complaints to other complaints schemes or to the Court in test cases.  In these cases, the current requirement for the complainant to consent to the FOS making the referral will be removed, enabling the FOS to make the referral where it considers this is appropriate;
• an expanded power to dismiss a complaint for ‘other compelling reasons’. In addition to some of grounds carried over from existing DISP rules, such as the complaint clearly not having any reasonable prospect of success, new examples of ‘compelling reasons’ will be introduced, such as where the complainant (with knowledge of the right to refer a complaint to the Financial Ombudsman Service) has already concluded a full and final settlement with the respondent regarding the subject matter of the complaint; and
• a new power to dismiss a complaint where a complainant fails to supply requested information or comply with a time limit, in addition to the FOS’s existing power to treat such cases as withdrawn.

In response to the consultation, the FOS has emphasised that it would address concerns about barriers to accessing the service by using these dismissal powers reasonably and consistently.

At the time of writing, the FOS’s statutory jurisdiction in s228 Financial Services and Markets Act 2000 is the subject of proposed amendment in the Financial Services and Markets Bill. 

Regardless of that, the FCA rule in DISP 3.6.4, which lists matters to which the FOS must take into account when exercising its ‘fair and reasonable’ jurisdiction, will be amended to make clearer that the relevant law, regulations, regulatory rules and guidance, codes of practice, etc. in issue are expressly those that were in force at the time of the act or omission complained of. The FOS has made clear in its response that it regards this as a clarificatory amendment rather than a change of policy. 

The FOS’s earlier proposal to remove what the FOS 'considers to have been good industry practice’ as a consideration will not be taken forward at this time, and will remain in DISP 3.6.4 for now, pending passage of the Bill. The FOS has however indicated that it will review the matter in the future once any amendments to FSMA are clearer.

The Policy Statement in issue contains a series of changes that appear to have received broad support during the consultation, and are likely to be positive for all service users, including the financial services firms that are subject to the FOS’s jurisdiction.

The new pre-registration and registration stages for complaints, if implemented well in practice, should in principle assist both complainants and respondent firms by ensuring complaints are sufficiently well-developed before they go forward for investigation, reducing the need for the FOS to interpret or infer their true subject matter. 

Likewise, the amended grounds for dismissal without investigation are in our view a welcome development.  Whilst the FOS will remain very much in control of any decision to dismiss, the new provisions should provide a reinforced set of tools to deal with unmeritorious complaints and refer away those which should be resolved elsewhere, which is particularly important in our view in scam-related complaints where criminal fraud and money laundering are frequently live issues and multiple other agencies may be involved.  The new powers will, however, need to be used appropriately; the FOS will need to be willing to use the dismissal powers robustly where necessary to ensure that concerns raised by industry during the consultation are properly addressed. 

It will also be important that, in due course, any amended structure for case fees of the FOS also takes the new processes into account, and recognises that firms should not be required to incur material costs because the FOS has to deal with poorly formulated complaints or poorly advised complainants.    

Firms covered by the FOS’s jurisdiction should start taking action now to amend their complaints handling processes.  In particular, firms may need to upgrade their processes for dealing with the FOS around the point of a new complaint being referred, including to make sure that they are ready to deal with any complaints handed back to the firm for further work at the point of registration, and to make sure that they are raising appropriately with the FOS complaints that should be dismissed on the amended grounds.

The FOS’s August 2026 Policy Statement must however be seen in context.  It is one part of a set of broader proposed reforms which appeared in an HM Treasury paper of March 2026 and CP 26/9, and are reflected in the initial draft of the Financial Services and Markets Bill.  More radical reforms to the FOS, including to its ‘fair and reasonable’ jurisdiction and a proposed new mechanism for the FOS to refer matters to the FCA, remain before Parliament in the draft Bill.  Further rules and guidance are likely from the FCA later in the year, as well as a further consultation from the FOS on its fees regime.