Shaping the future of consumer redress: FG26/2 and CP26/9
7 April 2026
The Finalised Guidance (FG)26/2 and Consultation Paper (CP)26/9 released earlier last month will shape the future of consumer redress.
On 16 March 2026, the Financial Conduct Authority (FCA) and the Financial Ombudsman Service (FOS) published a package of measures to modernise and strengthen the UK’s redress framework:
- FG26/2 – the FCA’s finalised guidance on good and poor practices for firms on redress exercises.
- CP26/9 – a joint consultation paper and policy statement outlining reforms to complaints handling and FCA and FOS processes, building on the earlier work from 2024 and 2025.
The guidance and proposals set out in CP26/9 establish a clearer framework for consumer redress, encouraging earlier remediation, enhancing consistency and providing greater certainty for both consumers and the industry.
CP26/9 – Structural reforms to modernise redress
The CP highlights a push for greater regulatory coordination, as the FCA and FOS commit to earlier identification of harm, faster escalation of redress issues and a more predictable environment for firms to invest and innovate. Key proposals include:
- A new two‑stage FOS complaints process – the FOS proposes a formal ‘registration stage’ so that only fully evidenced and in‑scope complaints progress to investigation. The new stage would allow complaints to be held, returned or dismissed earlier, reducing delays and costs for all parties.
- Updated dismissal grounds – the FOS intends to expand the grounds under which it can formally dismiss a complaint without completing a full investigation. These new grounds would include the ability for the FOS to dismiss more vexatious or abusive complaints and allow dismissal where the complaint has already been handled in accordance with FCA rules and guidance.
- Clarifying the fair and reasonable test – under current rules, when assessing what is fair and reasonable, the FOS can consider not just the rules and standards in force at the time of the act or omission, but also what constituted “good industry practice”. The CP proposes to remove this “good industry practice” element from the test. Instead, the FOS would apply only the regulatory standards, rules and guidance that were in place at the time.
CP26/9 policy statement
The second part of CP26/9 is a policy statement which finalises elements of CP25/22, including new SUP 15 guidance. The SUP guidance clarifies when firms must report emerging issues. It is supported by the non-Handbook guidance in FG26/2, which gives examples of good and poor practice to help firms identify and resolve redress issues.
There is a new requirement for firms when acknowledging complaints (under DISP 1.6.1R) to state that they will provide a written response within eight weeks. The change will take effect from 1 June 2026, allowing firms to update their complaint acknowledgement templates before then. Those following the Society of Lloyd’s multi-stage complaints process can comply by explaining the relevant Lloyd’s timelines.
The policy statement confirms a series of rule changes aimed at improving operational efficiency at both the FOS and the Financial Services Compensation Scheme (FSCS). These include amendments to DISP, designed to clarify and reinforce good complaint‑handling practice without imposing disproportionate burdens on firms and changes to the Compensation Sourcebook (COMP) intended to streamline FSCS processes.
Collectively, the proposals in CP26/9 and the expectations set out in FG26/2 are intended to provide a coherent, consistent and transparent regulatory framework for both firm-led and Ombudsman-led redress processes.
How FG26/2 is setting clear expectations for firm-led redress
FG26/2 clarifies the FCA’s expectations for firm led redress and provides examples of good and poor practice across the full redress lifecycle, complementing the proposals set out in CP26/9.
Examples of good practice | Examples of poor practice |
Early and proactive identification of harm: Actively monitoring data, identifying emerging systemic issues early and taking prompt steps to assess and address harm. | Inadequate identification of issues Failing to identify emerging harm or delaying action until prompted by the FCA or external scrutiny. |
Comprehensive root cause analysis Undertaking thorough analysis to understand underlying causes, affected populations and potential consumer detriment. | Superficial or narrow root cause analysis Undertaking limited reviews that do not properly explore all customer impacts or drivers of harm. |
Robust scoping of redress exercises Applying clear, fair criteria for determining who is included in redress, avoiding restrictive definitions that could exclude impacted customers. | Redress criteria that seek to limit liability Using restrictive eligibility rules, inappropriate thresholds or exclusions that reduce the number of customers included rather than reflect genuine scope. |
Opt‑out as the default approach Using opt‑out redress as the default position, ensuring that all affected consumers are included unless they choose otherwise. | Over‑reliance on opt‑in models Requiring customers to take additional steps to receive redress, leading to lower participation and unfair outcomes. |
Clear, accessible customer communications Providing transparent, easy‑to‑understand communications, with tailored support for vulnerable customers. | Poor communication and customer engagement Using unclear, complex or technical language, failing to tailor communications to vulnerable customers or not providing sufficient support. |
Strong governance and oversight Supporting redress exercises with well‑defined governance structures, adequate senior oversight and credible challenge throughout. | Weak governance and limited oversight Lacking senior management involvement, insufficient challenge or inadequate monitoring of redress outcomes. |
Avoid barriers or exclusions Designing redress schemes in a way that does not rely on unnecessary exclusions, minimum thresholds or processes that create friction for consumers. | Unnecessary barriers Designing redress processes with unnecessary barriers, thresholds or administrative requirements that restrict access to redress or deter eligible consumers. |
What are the next steps for FG26/2 and CP26/9?
Although FG26/2 and CP26/9 serve different functions, they are deliberately designed to reinforce each other. The combined approach seeks to strengthen the redress system and set the direction for future reform.
The consultation remains open until 11 May 2026. Stakeholder feedback will inform the FCA and FOS’ final approach and how the proposed reforms will work in practice. A further policy statement covering all proposals is expected later in 2026.
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Sarah Ouarbya Partner - Risk and Regulatory Consulting - London
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