Modernising Complaints Reporting – what it means for firms and their insurers

The Financial Conduct Authority (FCA) has launched a consultation, which could see significant updates to the way regulated firms collect and report complaints. The consultation is part of the FCA’s strategy to reduce regulatory burdens while improving data quality and transparency, as well as having consideration of the Consumer Duty.

Overview of the changes

The FCA is seeking feedback on several proposed changes aimed at modernising the complaints reporting process, which include:

• Consolidating 5 returns into a single return
• Aligning complaint reporting requirements more closely with actual consumer harm, rather than the volume of complaints alone

The FCA’s intention is to make complaint data more useful for their ongoing supervisory work and to reduce the operational burden on firms. The FCA’s last review of complaints data collection was in 2015. Much has changed in 10 years and it is not surprising that the regulator is seeking to streamline the process.

Impact on regulated firms

One of the FCA’s core objectives is to make the complaints reporting process less onerous. By cutting down the volume of required data points and focusing on meaningful indicators, firms - especially smaller ones - will likely benefit from reduced compliance workload.

The trade-off, however, will be a more targeted approach to the oversight of complaints. The FCA intends to focus on complaints that may increase consumer harm or highlight systemic issues. Firms can expect more scrutiny where patterns of poor customer outcomes emerge, even if complaint volumes are relatively low.

Some in the industry had hoped that the requirement to report concluded or low-value claims would be removed, but the consultation confirms firms will still be required to report all claims they deal with, regardless of the value or potential early settlement.

Firms may still need to adjust internal processes and IT systems to align with the new reporting format and revised data requirements. Staff training, policy updates, and new internal controls may be necessary to ensure accurate submissions.

The consultation is open for responses until July 24 2025. Subject to feedback, the FCA intends to publish a policy statement later in 2025, with changes expected to come into effect in 2026.

Comment

The consultation reflects the FCA’s commitment to modernising regulation by reducing unnecessary burdens while enhancing its ability to identify and respond to consumer harm. For regulated firms, the proposals offer a welcome opportunity to streamline operations -but also signal a shift toward more outcomes-based regulatory scrutiny.