FOS Reform: Momentum builds as next phase of change approaches

In July 2025, the FCA and FOS published CP25/22 on Modernising the Redress System, proposing significant reforms to the UK's financial redress framework alongside a parallel HM Treasury consultation proposing changes to the fair and reasonable test, a 10-year longstop, and a formal FCA referral mechanism. For a summary, please see our previous briefing: FOS at a Crossroads: Material Reforms Aim to End Quasi-Regulatory Role.  

 

FOS Board decisions: 13 January 2026

At its 13 January 2026 meeting, the FOS Board agreed two key next steps: 

(i) It approved publication of a joint feedback statement with the FCA responding to the CP25/22 consultation; and

(ii) It authorised a further consultation on a new registration stage and dismissal grounds, with a proposed eight-week response window. 

Both were expected in February 2026, with implementation targeted for the 2026/27 financial year. At the time of writing this briefing, neither have been published.

 

Registration stage

A feature of the reform programme is the creation of a formal registration stage between referral and investigation. This would operate as an early checkpoint, allowing FOS to confirm that threshold requirements have been met before a complaint progresses to full investigation. At this stage, FOS would assess matters such as jurisdiction, admissibility, evidential completeness and whether the firm has issued a final response. From a firm perspective, this change has particular significance because it would give FOS greater flexibility to hold complaints pending regulatory clarification or redress schemes, without triggering immediate fee exposure.

The Board noted that while feedback on the registration stage has been broadly positive, concerns have been raised about vulnerable complainants. The Board has emphasised that information required at registration is already collected later in the complaints handling process, and that bringing it forward is intended to improve the customer journey rather than introduce a barrier to access

The FOS Board has considered two alternative models for implementing the registration stage and has indicated a preferred approach, though the design detail and operational impact will only become clear once the further consultation is published. Firms will need to assess the chosen approach when those proposals are released. 

 

Dismissal grounds

Following the Government's planned repeal of the ADR Regulations, the consultation will also consider the grounds for dismissing complaints. Consultation responses showed strong support – particularly from industry for broader dismissal powers, including in relation to poorly detailed or bulk-submitted complaints, cases involving proactive redress schemes, or where FOS had issued ‘lead decisions’ that firms were willing to apply to other complaints. 

In CP25/22, FOS indicated that it is considering widening dismissal grounds where complaints fall within a redress scheme, but it remains to be seen what additional proposals emerge and whether any broader expansion of those powers is taken forward.

 

Fair and reasonable test

FOS, the FCA and HM Treasury continue to work on reforms to the fair and reasonable test. Progress on this reform will be addressed in the joint feedback statement and it remains one of the most significant elements of the reform package.

 

Complaint volumes already falling

Separately, FOS considers that incremental changes already introduced are having a positive effect. Data published for October – December 2025, reveal that complaint volumes have fallen to their lowest level in two years, driven in large part by a reduction in cases submitted by professional representatives following the introduction of a per case fee. This measure appears to be deterring speculative or poorly prepared complaints and improving overall submission quality.

 

What happens next and why does this matter?

The joint FCA/FOS feedback statement and further consultation were expected to be published in February 2026. February has come and gone with no sight of these documents. The minutes record that a further Board meeting was scheduled for 26 January 2026, which may provide context for the delay, but the minutes of that subsequent meeting have not yet been published. Notwithstanding this delay, we anticipate that publication is still expected imminently, with implementation of the registration stage and dismissal reforms still targeted for the 2026/27 financial year.

Reform of the FOS framework has been a long running process, with firms actively considering the prospect and implications of change for many months. While all stakeholders may be experiencing a degree of consultation fatigue, the direction of travel is becoming clearer and we continue to stand on the cusp of meaningful, long-awaited change. Firms should remain on high alert for further developments and be ready to engage swiftly once the next phase of reform is confirmed.