In a consultation paper, the FCA said it wanted to simplify how firms report their complaints, so the process is “more consistent and improves the quality of data we collect”.
Consequently, it wants to bring together its Dispute Resolution 1 return, Consumer Credit return, Payment Services return, Claims Management Companies return and Funeral Plan Complaints return into one.
This will also make completing nil returns “simpler”, the regulator said.
The FCA added that it is consulting on removing group reporting, so all regulated firms, including those part of corporate groups, would report their complaints data at an individual firm level.
This would minimise risk of misreporting and help “spot potentially adverse trends in complaints across reporting periods for individual firms”.
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The consultation will also look at changing proposed guidance on the products and services it expects firms to report complaints against, the frequency of return submission and tying complaint submissions to specific data across the board.
Another area it is looking at is complaint categorisation, noting that currently around 65% of complaints for home finance product and services groups since 2022 are in the ‘other’ category.
It said that by introducing a wider list of products and services, such as regulated first charge, regulated second charge and regulated bridging loans, and removing others like impaired credit, this may “provide more meaningful data”.
The regulator said that currently, firms must report numbers of customer complaints they receive, but it has not reviewed the data collection process since 2015.
The FCA said: “We know that many firms have to complete multiple (and sometimes overlapping) returns, which creates inefficiency and unnecessary burden. This increases the risk of misreporting and makes it difficult for us to meaningfully interpret trends through repeat or overlapping complaints data.”
The consultation paper estimated that around 41.3% of relevant firms submit multiple returns, equal to around 9,802 firms.
Returns in the scope of the review include firms with permissions to carry out regulated activities, firms who carry out regulated credit-related activities, firms with complaints about regulated funeral plan activities, payment service providers and firms with claims related to regulated claims management activity or activity ancillary to this.
The FCA said the problem with the current complaint reporting process includes multiple complaints returns creating overlap and more work, especially for larger firms.
Other problems with the current process mentioned include differing levels of detail in complaint data based on reported complaint numbers and the categorisation of complaints being unclear or outdated in some instances.
Sarah Pritchard, the FCA’s executive director for supervision, policy, competition and international, said: “Streamlining the complaints data reporting process will ease unnecessary burdens on firms and strengthen our commitment to smarter, more effective regulation. These proposals will also help us collect better-quality data on complaints received by firms, which will help us spot and respond more quickly to harm as it arises.”
The regulator said that it welcomed feedback on proposals by 24 July.
