Regulator also expands AI live testing to assess risks and consumer impact
The Financial Conduct Authority (FCA) will replace its existing complaints reporting returns with a single consolidated submission, in a move intended to improve data quality and strengthen consumer protection.
Under the new framework, five separate returns will be merged into one standardised report. The regulator expects this to simplify reporting, cut duplication and support more consistent, comparable complaints data across the market.
A key element of the new framework is a requirement for firms to identify and report complaints involving customers in vulnerable circumstances. The regulator said this will allow it to monitor outcomes for at‑risk groups more closely and assess whether firms are offering appropriate support.
“These improvements are a significant step forward in ensuring transparency and consistency across the sector,” said Sarah Pritchard (pictured right), deputy chief executive of the Financial Conduct Authority.
“By streamlining returns and introducing clearer guidance, we’re making it easier for firms to provide high-quality complaints data while strengthening our ability to protect consumers, particularly those who are most vulnerable.”
The FCA will also bring in clearer guidance and fixed six‑month reporting periods for all firms. This is expected to deliver more timely insights, support benchmarking and underpin higher‑quality complaints data for supervisory and policy work.
The first reporting period under the new regime is scheduled to run from Jan. 1 to June 30, 2027, giving firms a long lead‑in to update systems and processes.
From a risk and governance perspective, observers argue that the more detailed reporting will place greater emphasis on firm‑level accountability.
“The finalised complaints rules from the FCA will make it simpler for firms to report and improve transparency while simultaneously strengthening protections for vulnerable customers,” said Richard Pinch, senior director of risk at independent financial services UK consultancy Broadstone. “It delivers on the regulator’s objectives of cutting additional burdens on firms without losing, and indeed building, consumer protections.
“The additional granularity in data that the regime will create is to be welcomed as it will ensure accountability at firm level, more efficient regulatory scrutiny and a greater ability to intervene on behalf of consumers. The new regime will begin at the start of 2027 giving firms plenty of time to prepare and deliver a smooth transition to the new reporting processes.”
For mortgage lenders and intermediaries, the focus on vulnerability and standardised data is likely to require closer co‑ordination between conduct, collections and complaints teams, particularly around arrears, forbearance and product suitability.
FCA develops AI ‘safe space’ for live market testing
Alongside the complaints reforms, the FCA is developing its approach to artificial intelligence through its AI Live Testing initiative, which offers firms a controlled live environment in which to test AI systems.
The programme is aimed at firms ready to deploy AI in UK financial markets. Participants receive tailored regulatory and technical support from FCA specialists and from Advai, the regulator’s technical partner, to help them develop, assess and deploy AI systems in line with expectations on safety and responsibility.
The first cohort includes Gain Credit; Homeprotect, part of the Avantia Group; NatWest; Monzo; Santander; Scottish Widows, part of Lloyds Banking Group; and Snorkl.
Testing focuses on evaluation frameworks, live monitoring, governance and risk management, with the aim of ensuring that AI is used safely for consumers and markets. Many current use cases sit in retail financial services, including tools to support debt resolution, provide financial advice, improve customer engagement, streamline complaints handling and help consumers with spending and saving decisions.
Insights from the programme will inform the FCA’s understanding of how AI could shape UK financial markets and guide its future regulatory approach. AI Live Testing sits alongside the regulator’s Supercharged Sandbox, which is aimed at firms still in the early discovery and experimentation stages of AI adoption.
Applications for the second AI Live Testing cohort are due to open in January 2026, with successful firms expected to begin testing from April.
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