The FCA has introduced Instrument FCA 2026/5 alongside Financial Ombudsman Service (FOS) Instrument 2026/4, implementing a series of reforms to the UK’s complaints handling and redress framework relating to the provision of targeted pension and investment support. These changes follow earlier consultations and policy development set out in CP25/17, CP25/26, and finalised in PS25/22. Collectively, the measures are intended to enhance consumer protection, improve operational efficiency within firms, and ensure the sustainability of the FOS in the face of rising complaint volumes. This article summarises the key changes and highlights the practical implications for regulated firms.
Background and Policy Drivers
The FCA’s review of the complaints framework was driven by several factors:
- A sustained increase in complaint volumes referred to the FOS
- Concerns regarding inconsistent complaint handling standards across firms
- Operational strain on the FOS leading to longer resolution times
- The need to ensure proportionality and fairness in the funding model
CP25/17 and CP25/26 explored options to address these issues, with PS25/22 confirming a package of reforms designed to rebalance responsibilities between firms and the FOS while maintaining strong consumer outcomes.
Key Features of FCA 2026/5 and FOS 2026/4
- Targeted Support Framework
FCA 2026/5 updates multiple Handbook modules to clarify regulatory definitions, update reporting and compliance expectations, and embed the FCA’s oversight for the voluntary participation of firms in FOS complaints processes. It introduces definitions and guidance for “providing targeted support,” which involves:
-
- Grouping individuals with shared characteristics or circumstances
- Making recommendations tailored to those groups
- Ensuring suitability based on individual alignment with the group
These provisions support firms in delivering personalised guidance while remaining compliant with FCA rules.
- Voluntary Jurisdiction Rules and Guidance
FOS 2026/4 confirms that the Financial Ombudsman can make and amend rules for Voluntary Jurisdiction complaints cases where firms opt to refer complaints not covered by the compulsory jurisdiction. FCA 2026/5 approves and oversees these rules, including standard terms for participating firms. This ensures consistency, transparency, and regulatory alignment.
- Fee and Funding Provisions
The instruments include amendments enabling the FCA to levy fees related to applications for permission to provide targeted support, while also supporting the FOS’s differentiated case fee structure. This approach balances financial sustainability with fair access for consumers.
- Implementation Timelines
Different parts of the instruments come into force on staggered dates:
-
- 2 March 2026: Initial provisions for fee levies and commencement of Annex D
- 6 April 2026: Most Handbook amendments
- 31 December 2026: Parts of Annex M aligning with the Complaints Reporting Instrument 2025
Practical Implications for Firms
- Compliance Readiness: Firms must update internal policies, processes, and reporting frameworks in line with revised DISP rules and voluntary jurisdiction guidance.
- Governance and Oversight: Strengthening senior management accountability and ensuring clear roles and responsibilities is critical.
- Complaint Handling and Consumer Outcomes: Emphasis on robust escalation procedures, accurate case submissions, and early resolution will reduce operational risk.
- Fee Management: Firms should assess financial exposure under the new FCA and FOS charging framework.
- Targeted Support Implementation: Firms providing personalised guidance should align recommendations with the defined “consumer segment” criteria to meet regulatory expectations.
Conclusion
The introduction of FCA 2026/5 and FOS 2026/4 marks a significant evolution in the UK complaints and redress landscape. By reinforcing firms’ responsibilities and reforming the FOS funding model, the FCA aims to create a more efficient, fair, and sustainable system.
Firms should act proactively to ensure compliance and to leverage improved complaint handling as a driver of better customer outcomes and operational resilience.
How Complyport can help?
At Complyport, we support firms in navigating evolving complaints handling and redress requirements, translating complex regulatory change into practical, proportionate solutions. Following the introduction of FCA 2026/5 and FOS 2026/4, firms may need to reassess their complaint handling frameworks, operational processes, and governance arrangements to align with heightened regulatory expectations and changes to the FOS funding model. Our specialists work closely with organisations to ensure compliance while enhancing efficiency and customer outcomes.
- Regulatory Impact and Compliance Readiness:We help firms assess how the new FCA and FOS requirements impact their existing complaints handling frameworks. This includes reviewing currentprocesses against updated DISP expectations, identifying gaps in root cause analysis and escalation procedures, and developing tailored implementation plans to support compliance and operational readiness.
- Governance and Oversight Frameworks:Robust governance is critical under the revised regime. We support firms in strengthening oversight of complaints handling, including clarifying roles and responsibilities at Senior Management level, enhancing MI reporting, and embedding effective challenge and accountability across the three lines of defence.
- Complaints Handling, Root Cause Analysis and Customer Outcomes:Our team assists firms in enhancing end-to-end complaint handling processes, with a particular focus on early resolution, clear customer communications, and robust root cause analysis. We help design and implement frameworks that not only meet regulatory expectations but also reduce the likelihood of repeat issues and FOS escalation.
Contact Us
To understand how the FCA’s Instrument may affect your business, arrange a meeting with one of our compliance experts.
Ask ViCA, your Virtual Compliance Assistant. Claim your complimentary 20 queries today! Register here: https://vica.chat
