Call for Input on mass redress – an opportunity for change

Last week we submitted our response to the Call for Input on modernising the redress system. We took this as an opportunity to raise a couple of wider key topics that we were keen to include around the complaints process.

One of these is dialogue with the industry around complaints, to improve outcomes for all concerned – firms, the Ombudsman, and ultimately, the consumer.

While we believe there are some tangible changes that can be made to the process (which we raise within our submission) there is a need for a more significant change within the FOS, and how it interacts with the industry and other stakeholders.

We believe that the FOS can significantly improve the current framework for managing matters with wider implications by developing a new culture, fostering greater transparency, collaboration, and efficiency.

The Wider Implications Framework’s (WIF) role could be enhanced to better manage systemic issues and prevent escalation.

Early identification of risks through the WIF would also reduce the likelihood of costly mass redress events and encourage proactive handling of systemic issues to deliver consistent and timely redress for consumers.

So, we are calling for regular feedback loops and consultation mechanisms to be established to identify emerging trends collaboratively. This could include real-time communication channels and the establishment of stakeholder forums. Through this firms, consumer representatives and trade bodies could directly engage with the regulators.

This would strengthen relationships between regulators, industry, and consumer groups. It would provide valuable insights to inform regulatory actions. There is an opportunity to enhance transparency, involving those outside the regulatory family also.

Another area we have identified is the issue of time limits and the ambiguity that surrounds them.

We strongly believe the FCA and FOS should review the current time limits for referring complaints to provide greater certainty for firms while maintaining fair consumer protections.

The current rules—particularly the “three-year from the date of knowledge” provision introduce significant ambiguity, leaving firms vulnerable to open-ended liability and increasing the risk of inconsistent outcomes.

To address this, we propose a few changes. We recommend introducing an absolute longstop from the event date, giving rise to the complaint. This would provide firms with a clear liability endpoint, while ensuring consumers have ample time to bring complaints.

The “date you knew” rule should also be clarified. The three-year rule is subjective and inconsistently applied. We have seen the FOS place an unreasonable burden on firms to prove when consumers become aware of their right to complain.

There should be a clear burden of proof that balances fairness between firms and consumers, ensuring firms are not unfairly burdened. We believe that this will help market integrity and competitiveness.

In creating a predictable regulatory environment, it would encourage investment and innovation that has been so hard to achieve in alternative lending given their recent experience of the complaints system.

These are two examples of areas that could be improved both to better handle mass redress events but also the wider complaints framework so it functions better for consumers and firms alike.