2. Improving the redress framework

Sometimes things will go wrong in the way consumers are treated. When that happens, we want people to be put back in the position they should have been in.

Whenever possible, we want the firms responsible for the harm to be the ones to put things right. This means we need a redress framework that delivers redress at the earliest possible point. Where achievable, consumers should be repaid swiftly by the firm which caused them harm without them having to complain.

If a consumer makes a complaint, the firm should resolve it as effectively as possible to avoid further costs to the consumer, business or the wider industry.

Confidence

Outcome 1: The redress system delivers timely and fair complaint resolution and compensation to consumers

Metric codeMetric descriptionSourceBaseline ValueYear 1 valuesYear 2 valuesYear 3 values

Latest status

(year 3 value compared to baseline)

IRF2-M01Increase in the overall timeliness of firms’ complaint resolution measured by the proportion of complaints closed within 3 days, between 3 days and 8 weeks, and after 8 weeksFCA data

Complaints closed within 3 days: 48%

(2021)

Complaints closed within 3 days: 49%

(2022)

Complaints closed within 3 days: 45%

(2023)

Complaints closed within 3 days: 44%

(2024)

Improved

Complaints closed after 3 days but within 8 weeks: 42%

(2021)

Complaints closed after 3 days but within 8 weeks: 46%

(2022)

Complaints closed after 3 days but within 8 weeks: 47%

(2023)

 

Complaints closed after 3 days but within 8 weeks: 50%

(2024)

Complaints closed after 8 weeks: 9.5%

(2021)

Baseline has been adjusted to also include 2021 H1 figures to give the total % for 2021

Complaints closed after 8 weeks: 5.5%

(2022)

Note- slight sum error due to rounding methodology used (i.e. round numbers 10-90, 1dp <10 & >90)

Complaints closed after 8 weeks: 7.7%

(2023)

Note- slight sum error due to rounding methodology used (i.e. round numbers 10-90, 1dp <10 & >90)

 

Complaints closed after 8 weeks: 6.12% (2024)

Note- slight sum error due to rounding methodology used (i.e. round numbers 10-90, 1dp <10 & >90)

IRF2-M02Increase in complaints upheld by firms, measured by complaints upheld by firms from FCA complaint dataFCA data

59%

(2021)

60%

(2022)

61%

(2023)

57%
(2024)
 
Little or no change
IRF2-M03Increase in instances of firms putting things right by themselvesFCA data   We were aiming to improve our data on firms putting things right themselves through our complaints reporting project, however we determined that the data would not be in place by the end of the 3-year strategy.Not assessed

Outcome 2: Firms that create redress burden bear the associated cost themselves

Metric codeMetric descriptionSourceBaseline Value(s)Year 1 valuesYear 2 valuesYear 3 values

Latest status

(year 3 value compared to baseline)

IRF3-M01

 

 

This metric uses the same data as topline metric CCO2-M01

Stabilisation of the redress burden from insolvent firms’ unpaid liabilities through FSCS claims over a multi-year period, with a view to a subsequent reductionFinancial Service Compensation Scheme

28,007 new claims

(2020/21)

24,709 new claims

(2021/22)
 

21,067 new claims

(2022/23)

40,568 new claims

(2023/24)

Improved

43,407 payments made

(2020/21)

62,380 payments made

(2021/22)

67,908 payments made

(2022/23)

32,668
Payments made


(2023/24)
 

£584m compensation payments

(2020/21)

£584m compensation payments

(2021/22)

£403m compensation payments

(2022/23)

£423m
compensation payments

(2023/24)

£327m compensation payments

(2024/25)
 

IRF3-M02To stabilise the overall FSCS levy bill, with a view to a future reduction, and to minimise calls on the Retail Pool, which represents the cost which industry levy payers need to meetFinancial Services Compensation Scheme

Total Levies firms paid £700m

(FY 2020/21)

Total Levies firms paid £717m

(FY 2021/22)
 

Total Levies firms paid £625m

(FY 2022/23)

Total levies firms paid £270m

(FY 2023/24)
 

Total levies firms paid £265m

(FY 2024/25)

Improved

Outcome 3: Consumers understand the redress system and how to access it

Metric codeMetric descriptionSourceBaseline Value(s)Year 1 valuesYear 2 valuesYear 3 values

Latest status

(year 3 value compared to baseline)

IRF4-M01Increase in proportion of consumers who are aware they can make a compensation claim for mis-selling of a financial product or service directly, without using a Claims Management Company (CMC)FCA  Financial Lives survey (FLS)

63% of consumers

(2020)

55% of consumers

(2022)

 

 

58% of consumers

(2023 re-contact survey)

 

 

51% of consumers

(2024)

Difference between year 3 and baseline value is statistically significant.
 

Declined

Fair value

Outcome 4: The Claims Management Companies (CMC) sector delivers fair value

Metric code Metric description Source Baseline Value(s) Year 1 values Year 2 valuesYear 3 values

Latest status

(year 3 value compared to baseline)

IRF1-M01An increase in the proportion of consumers who made a claim in the last 3 years and used a CMC for their most recent claim who consider that the service met their expectationsFCA Financial Lives survey (FLS)

57% of consumers

(2022)

 

Between 25% and 47% of consumers 

(2023 re-contact survey)


We reported a range rather than a single result here due to a low sample size of those who used a CMC in the last 3 years in the Financial Lives survey May 2023 recontact survey.
 

54% of consumers 
(2024)

Difference between year 3 and baseline value is not statistically significant.
 

Little or no change
IRF1-M02An increase in the proportion of consumers who made a claim in the last 3 years and used a CMC for their most recent claim who consider that the fee they paid was fairFCA Financial Lives survey (FLS)

39% of consumers

(2022)

 

Between 17% and 39% of consumers 

(2023 re-contact survey)


We reported a range rather than a single result here due to a low sample size of those who used a CMC in the last 3 years in the Financial Lives survey May 2023 recontact survey.

38% of consumers

(2024)

Difference between year 3 and baseline value is not statistically significant.

Little or no change

 

IRF1-M04Increase over time in CMC-represented Financial Ombudsman Service complaints that are upheldFinancial Ombudsman Service

34% uphold rate

(2021)

43% uphold rate

(2022)

 35% uphold rate

(2023)

30% uphold rate

(2024)

Declined

What the latest metric values tell us

In our 3-year strategy we set out the following outcomes:

  • The redress system delivers timely and fair complaint resolution and compensation to consumers.
  • Firms that create redress burden bear the associated cost themselves.
  • Consumers understand the redress system and how to access it.
  • The Claims Management Companies (CMC) sector delivers fair value.

Overall, we made progress against some of the outcomes we targeted, but we have more to do.

We saw improvements in the timeliness of firms’ complaint resolution with 94% of complaints being closed within 8 weeks in 2024 compared with 90% in 2021. However, the proportion of complaints which firms upheld directly has seen little change. But this is heavily influenced by uphold rates against a small number of products.

Our review into root-cause analysis of complaints under the Consumer Duty and publication of good practice helped firms improve how they handle complaints. We saw significant improvement in ensuring the firms that create the redress burden bear the associated cost. The total paid out by the FSCS in compensation has significantly decreased during the strategy period. The levy bill paid by firms reduced from £700m in 2020/21 to £270m in 2023/24. The FSCS has also reported increased recoveries from failed firms in 2024/25.

We supported this trend by encouraging firms to identify harm at an early stage and recently published a guide to help firms identify polluting behaviour. We also introduced asset retention rules for British Steel Pension Scheme adviser firms that were part of the redress scheme we ran. This helped prevent firms failing and passing their redress liabilities onto the FSCS. Our enforcement work against some of these firms also resulted in payments directly to the FSCS, helping to reduce the costs spread across the industry. We continued to focus on making sure the CMC sector delivers fair value following our introduction of caps on the fees CMCs can charge in 2022. We saw a reduction in complaints upheld by the Claims Management Ombudsman, indicating that CMCs are better serving customers. The proportion of consumers who are aware they can make a claim without using a CMC has deteriorated since the end of our PPI campaign when we invested significantly in raising awareness. We will continue to consider exploring ways in which we can improve consumer confidence in the redress system.