Complaints handling: FCA expectations and FOS referral trends
The FCA's Dispute Resolution sourcebook (DISP) sets out detailed requirements for how authorised firms must handle complaints from eligible complainants. The core obligations — acknowledging complaints promptly, investigating them thoroughly and impartially, and providing a substantive written final response within eight weeks — are well-established, but the FCA's supervisory focus has evolved significantly since the introduction of the Consumer Duty. Complaints handling is now explicitly identified as a key data source for the consumer support outcome, and the FCA expects firms to use complaints data not merely to resolve individual disputes but to identify systemic issues that indicate broader consumer harm.
The root cause analysis (RCA) obligation is where many firms' complaints frameworks fall short. DISP 1.3 requires firms to analyse complaints data to identify the root causes of recurring complaints and to take remedial action where this is appropriate. In practice, this means more than counting complaints by category — it requires firms to trace recurring complaints to their underlying cause, whether that is a product design flaw, a process failure, a training gap, or a communications issue, and to have a documented process for escalating identified root causes to management and implementing remediation. The FCA's Consumer Duty guidance makes clear that complaint data is a direct input into the board's annual Consumer Duty review, and that persistent high-volume complaint categories require substantive management response, not merely complaint resolution at the individual level.
The Financial Ombudsman Service (FOS) remains the primary external dispute resolution mechanism for eligible complainants. The FOS's published statistics and data reveal sector-level patterns in complaint volumes, uphold rates, and subject matter that are closely monitored by the FCA. Sectors with persistently high FOS uphold rates — where the FOS finds against the firm in a high proportion of referred cases — typically attract supervisory attention. Firms should track their own FOS referral rates, uphold rates, and the subject matter of upheld complaints as key indicators of both consumer harm and cultural health. A high uphold rate often indicates that the firm's own complaints handling process is not applying the same standards as the FOS — a signal that review and training are required.
The interaction between DISP and the Consumer Duty requires careful attention. Where a complaint raises issues that suggest a systemic product or process problem — for example, a pattern of complaints about unclear fee structures, or about difficulty accessing a service — firms are expected to consider whether the systemic issue requires proactive redress for customers who have not complained, not merely resolution for the individual complainant. This proactive redress obligation, while not explicitly codified in DISP, reflects the FCA's Consumer Duty expectation that firms actively identify and remediate consumer harm rather than waiting to be told about it.
Biannual complaints reporting
Firms must submit biannual complaints data returns to the FCA (DISP 1.10), covering the number of complaints received, opened, closed, and referred to FOS during the period. Firms receiving more than 500 complaints in a six-month period must publish a summary of their complaints data. The FCA uses this data to identify trends and, where necessary, to trigger supervisory engagement. Firms should review their complaint categorisation methodology to ensure consistent and accurate reporting.