The policy statement focuses on how the redress scheme can be reformed through changes to the FOS's rules (including FCA considerations, where applicable). Key measures include expanded dismissal powers, the introduction of a new registration stage and amendments to the FOS's "fair and reasonable" test, each of which is discussed in detail below.
New registration stage
The FOS will proceed with its proposal to introduce a new registration stage for complaints. However, its implementation will be delayed to align with the consultation on case fees expected later in 2026. In the meantime, the FOS will begin internal pilots, with formal rules and rollout expected at some point in 2027.
The new registration stage does not change the information required for a complaint; rather, it changes when that information must be provided. The aim is to reduce the need for the FOS to chase missing evidence and allow more time to be spent assessing the merits of a case. This will be achieved by ensuring that complaints are only progressed once they are deemed "ready to investigate", meaning the FOS considers that sufficient evidence has been provided.
Dismissal framework
Effective from 1 October 2026, the FOS's dismissal powers will be expanded. The key grounds for dismissing a complaint will include:
Complaints that are frivolous or vexatious, or where the complainant's conduct disrupts the complaints process.
Complaints that have previously been considered by the FOS, unless new factual evidence has emerged. A new argument alone will not be sufficient.
Complaints that have already been reviewed under a formal consumer redress scheme.
Complaints relating to employment matters, investment performance or the exercise of discretion under wills and trusts.
Complaints where there are other compelling reasons for dismissal. Non-exhaustive guidance will accompany this new power to promote consistency while preserving flexibility.
Complaints where another forum is more appropriate, such as a court.
Complaints where the complainant has suffered no financial loss, material distress or material inconvenience. Following consultation, the FOS amended its proposal by removing the requirement for financial loss to be "material".
Fair and reasonable test
The consultation sought views on amendments to the fair and reasonable test set out in DISP 3.6.4R and the rules made by the FOS, with the FCA's consent, regarding what an ombudsman should take into account when deciding what is fair and reasonable in a case. Further, views were sought on the operation of "good industry practice".
DISP 3.6.4R will be amended so that an ombudsman should only take into account the following factors when deciding what is fair and reasonable:
law and regulations;
regulators' rules, guidance and standards;
codes of practice; and
what the ombudsman considers to be good industry practice (where appropriate).
The policy statement confirmed that the final factor ("good industry practice") will remain for now, pending legislative scrutiny of the government's proposals relating to the fair and reasonable test through the FSM Bill.
Cases currently with the FOS will not be subject to the updated rules, and DISP 3.6.4R as amended will only apply to new cases post October 2026.
Conclusion
The joint policy statement signals a clear drive to improve the efficiency of the redress scheme. Firms will welcome the expanded dismissal powers coming into force in October 2026. However, the FOS has been far more cautious when reforming the "fair and reasonable" test. Although the changes are modest, the treatment of "good industry practice" remains a key point to watch as the FSM Bill continues its passage through the House of Lords this month.
