CP25/22 Explained: What Redress Reforms Mean for Firms

On 15 July 2025, the FCA and the Financial Ombudsman Service (FOS) published CP25/22: Modernising the redress system, inviting feedback until 8 October 2025.

The consultation follows the previous ‘Call for Input’, where feedback had indicated that the current redress system often creates uncertainty, delays and poor outcomes for firms and consumers.

The aim of this consultation is to create a transparent redress framework that will benefit consumers, firms and investors with emphasis on encouraging earlier redress handling and stronger collaboration.

Who Should Respond to Consultation CP25/22

The FCA is seeking feedback from a broad range of stakeholders, including but not limited to:

• Consumers and advocacy groups
• Regulated firms and financial advisers
• Compliance and legal professionals
• Ombudsman staff
• Industry bodies and trade associations
• Think tanks, academics and policymakers

Five Key Areas of Reform in CP25/22

1. Encourage earlier and fairer redress
2. Improve transparency and predictability
3. Bridge the gap between FCA and FOS decisions
4. Use redress to prevent future harm
5. Encourage long-term improvements

The FCA and FOS focuses on five priority items for reform:

1. Encourage Earlier and Fairer Redress

   
   The FCA wants to create a framework that supports firms in identifying and addressing issues promptly, without the fear of retrospective judgement. This means that there will be a clearer approach in guidance and better data-sharing with the FOS to improve consistency.
   
   

2. Improve Transparency and Predictability

   
   The FCA wants to increase understanding of how redress decisions are made and promote consistency across the sector. This includes:
   
   
   • Improved public information on how complaints are resolved
   • Clarifying the outcomes consumers should be expecting
   • Exploring how redress is calculated, developed and disclosed.
     
     

3. Bridge The Gap Between FCA and FOS Decisions

   
   The FCA is working closely with FOS to narrow interpretation gaps. A revised Memorandum of Understanding has already been published to ensure better coordination on redress across both organisations.
   
   

4. Use Redress to Prevent Future Harm

   
   The FCA intends to use redress as a tool for systemic improvement, not only for remediation. This means:
   
   • An emphasis placed on root cause analysis
   • Applying information learnt from redress cases across wider firm conduct
   • Strengthening governance, MI and accountability frameworks.

5. Encourage Long-term Improvements

   
   The consultation emphasises on data gathering, research, and behavioural insight to drive long-term redress improvements. This includes a continued focus on root cause analysis and feedback loops into firm systems and controls.

What This Means for Firms

The deadline is 8 October 2025. A response to this consultation should be submitted via the FCA’s online portal, by email or by post as outlined in the consultation paper.

If implemented, these proposals would mark a significant shift in how firms approach redress. This includes changes to complaint handling beyond the current DISP rules, as well as updates to redress decision-making, record-keeping, internal governance, management information (MI), and consumer outcome tracking.

How Thistle Initiatives Can Help

We support firms in assessing their current processes, identifying gaps, and aligning complaint handling, governance and MI with evolving FCA and FOS expectations. If you’d like to speak to one of our regulatory specialists about how these changes may affect your firm’s redress processes, please get in touch.

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