Citing concerns about their ability to deal with systemic financial industry failings, the U.K.’s Financial Conduct Authority (FCA) and the Financial Ombudsman Service (FOS) are consulting on potential reforms to modernize the country’s dispute resolution and consumer redress system.
In a joint paper issued Friday, the FCA and FOS issued a call for feedback on reforming the redress system in the U.K., so that it does a better job serving consumers and provides a more stable and predictable environment for industry firms.
“The current redress framework works well for individual customer complaints about specific issues. However, challenges can occur when there are large numbers of complaints about the same issue,” the consultation noted.
As well, the challenge of dealing with so-called “mass redress events” can be compounded if firms aren’t able to identify these issues early, or don’t take quick action to correct them, it said.
“This can result in delays to consumers receiving redress and increased costs for firms,” the paper said, adding that this also has negative consequences for firms’ investors/shareholders, as well as “a potential knock‐on impact on growth, innovation and investment.”
The consultation seeks feedback on reforming the system to improve its ability to identify and deal with systemic issues to improve outcomes for investors, industry firms and the financial markets.
Additionally, the FCA and FOS said they will aim to improve how they work together, and with industry and consumer groups, “to prevent the escalation of issues that can result in mass complaints and create significant redress liabilities for firms.”
These efforts follow a call from the U.K.’s Chancellor of the Exchequer for greater co-operation among regulators, “to give firms a more predictable regulatory environment” that supports growth and competition.
The deadline for responding to the consultation is Jan. 30, 2025.
The FCA said it will publish its response, and next steps in this area, in the first half of 2025.