Consumer Scotland responds to FCA and Financial Ombudsman consultation on modernising the redress framework

Consumer Scotland, the statutory body for consumers in Scotland, published its response on 21 May 2026 to the Financial Conduct Authority and Financial Ombudsman Service consultation on proposals to modernise the redress framework¹. The body said it "broadly support[s] proposals to introduce a light touch registration stage"¹, while warning that a large volume of specific dismissal rules could change the nature of the service.

The consultation covers changes the FCA and the Financial Ombudsman (FO) have identified as possible within the existing framework, including initial implementation of a new referral mechanism and proposed updates to the "fair and reasonable" test¹. The stated aim is "to achieve greater predictability, certainty and transparency in the redress system"¹. Some measures need legislative change, and the UK Government has said it will legislate when Parliamentary time allows¹. Consumer Scotland also noted that the UK Government intends to remove the FO from the scope of the 2015 ADR Regulations in Spring 2026¹.

On registration, Consumer Scotland said any pause at that stage should be "for the shortest time necessary and be accompanied by clear and regular updates to complainers"¹. It said the registration stage should work as a gateway check rather than a detailed investigation, and that it should not feel like a separate process for consumers¹. It recommended plain language guidance, inclusive design with user testing, and a variety of contact methods to reduce digital exclusion¹.

On dismissal of complaints, Consumer Scotland said that "[i]n the absence of a detailed cost benefit analysis, it is difficult to identify clear benefits to consumers, either individually or as a group, arising from the proposals on the dismissal of complaints"¹. It broadly agreed that the FO should be able to dismiss complaints that are frivolous, vexatious and without merit, or where a complainer is abusive or acts unreasonably, but said the terms "are unlikely to be understood well by consumers and may cause upset or distress due to the nature of the terminology"¹.

The response raises specific concerns about complaints involving allegations of domestic abuse, economic abuse or coercive control, and says Consumer Scotland "would wish to see detailed consultation with bodies representing victim survivors"¹. It also favours retaining the current fair and reasonable test, and said that removing "good industry practice" as a relevant consideration risks "downgrading consumer protection" because that standard is higher than bare compliance with the rules¹. It added that it agrees "that it is fair and reasonable for firms to be held to account on the basis of the standards in place at the time of the transaction"¹.

The response states that a dismissal does not affect a complainer's existing legal rights against a firm or operate as a lifetime bar on referrals to the FO, and that there is an opportunity for representations by individuals before any dismissal on a case-by-case basis¹. It also says the proposals will not adversely affect consumers who need to complain if a firm fails to comply with the terms of the FCA's forthcoming Section 404 redress scheme for cases about Motor Finance Commission¹.

Why it matters for households

The Financial Ombudsman Service is the free route for UK consumers who cannot resolve a complaint with a financial firm, and the consultation concerns how complaints are handled at the point they arrive and the grounds on which they can be turned away. Consumer Scotland's response says the proposals could affect how quickly complaints move to investigation, how much information a consumer must supply, and whether a complaint is dismissed before its merits are considered¹. It warns that a rules-based approach could make the service harder to navigate, particularly for consumers in vulnerable circumstances, and that the terminology used for dismissal grounds may cause upset¹. The body also says the FO should monitor complaint numbers and complainer demographics, conduct research on user experiences and seek regular user feedback, with results presented to the FO Board and published¹. The Financial Ombudsman Service handles complaints under rules that sit alongside the fair and reasonable test, and the consultation forms part of the wider regulation and policy process for consultations.

What happens next

Some of the measures require legislative changes, and the UK Government has stated it will legislate when Parliamentary time allows¹. Consumer Scotland said a detailed equality impact assessment will be provided for the FO proposals alongside final policy proposals, and that it welcomes the commitment to collect information on complainer characteristics in future¹. It questioned whether it is efficient or effective to implement the rules and DISP changes before Parliament considers the legislation required for other, more significant changes to the complaints regime¹.