On 22nd May, the Financial Conduct Authority (FCA) released Consultation Paper CP25/13, “Improving the Complaints Reporting Process” as part of its five-year strategy to become a smarter regulator. The paper proposes enhancements to how regulated firms report complaints, aiming to simplify the process, improve efficiency and consistency, and enhance the quality of data collected.
Key proposals within CP25/13 at a glance:
Simplification of reporting: The FCA propose to streamline the complaints reporting process to make it more straightforward for firms. This includes consolidating the following five existing returns into a single one:
- Dispute Resolution (DISP) 1
- Consumer Credit (CCR)
- Payment Services (PS)
- Claims Management Company (CMC)
- Funeral Plan (FP)
The FCA also proposes to standardise the number of times it asks firms to send data returns by increasing the reporting frequency to six-monthly with submission deadlines proposed for 30 June and 31 December. The regulator believes this change addresses inconsistent reporting periods that hinder harm analysis and will support their goal of maintaining consumer confidence.
Efficiency and consistency: The FCA propose to implement a series of measures to ensure that the reporting process is both efficient and consistent across different firms. This includes the removal of ‘group level’ reporting so that firms report their complaints data only at an individual firm/entity level. The intention here is reporting at an individual firm level rather than at a group level will enhance the FCA’s oversight and enforcement capabilities.
Data quality improvement: The FCA believe that by enhancing the quality of complaints data collected, it will better inform regulatory actions and improve consumer outcomes. Their proposals include updating complaints categorisation to reflect current market products and services, with a focus on vulnerable customers. The FCA are also proposing to work with the Financial Ombudsman Service (FOS) to align classification systems and improve consistency with the aim of supporting the FCA’s effective supervision of Consumer Duty.
These proposals align to the FCA’s objectives to protect consumers, protect the integrity of the UK financial system and promote effective competition in the interest of consumers. While the proposed simplification of complaints reporting will reduce the operational burden on firms, it will provide the FCA with an early indication of customer harm and at a market level, will help focus supervisory and enforcement action through a strengthened dataset. Collectively, the FCA believe these proposals will also help to reduce overall complaint volumes through targeted interventions while driving competition and incentivising firms to improve service quality.
For firms, these proposals should make the complaints returns process more straightforward and less burdensome, although the internal changes required to align to the proposed changes should not be underestimated. Once these proposals are implemented, firms should expect to get far greater scrutiny off the back of your complaints returns. So be prepared to evidence the actions you are taking to mitigate customer harm through effective root cause analysis and ongoing outcomes monitoring.
Next steps
The FCA acknowledges that firms will require time to adapt. A 12-month implementation period is proposed, with a policy statement expected later in 2025 and the first submission under the new regime due December 2026.
Firms should now begin reviewing their existing complaints reporting processes and assessing their readiness for the proposed changes. This includes identifying any internal policy, process and control changes needed to align with the new reporting frequency, structure, categorisations and guidance. And as we have said above, be prepared to evidence the learnings from complaints and the actions you are taking to mitigate customer harm. So now is also a good time to be critically assessing your approach to complaints root cause analysis and outcomes monitoring, including how the learnings from these are driving a culture of continuous improvement and good customer outcomes. After all, that is at the heart of Consumer Duty and integral to the FCA’s supervision strategy.
The FCA is seeking views on CP25/13 to ensure the final framework is both effective and practical, with responses due by 24 July 2025.
If you would like to discuss any aspect of CP25/13, including how you should prepare for the proposed changes, please contact us at hello@square4.com or talk to one of our regulatory experts:
Darren Fisher: dfisher@square4.com
Erica Phelan: ephelan@square4.com
