Complaints Reporting Reform: Preparing for the July 2026 Taxonomy Changes

The FCA's complaints reporting landscape is about to undergo its most significant transformation in over a decade. From 1 July 2026, firms will begin collecting data under an entirely new taxonomy that consolidates five existing returns into a single, more comprehensive complaints return. Published in Policy Statement PS25/19, these changes represent a fundamental shift in how regulators will monitor complaints handling across the financial services sector.

For compliance teams, this is not merely a reporting update but a substantial operational change requiring careful planning and execution. This article examines what the new requirements entail, why the FCA has introduced them, and the practical steps your firm should be taking now to ensure a smooth transition.

Understanding the Context: Why Reform Was Necessary

The FCA's previous complaints reporting framework had evolved incrementally over many years, resulting in a fragmented system that created burden for firms whilst providing regulators with incomplete and often inconsistent data. The existing regime required firms to submit multiple returns at different frequencies, using varying categorisation approaches that made meaningful cross-sector analysis challenging.

The consultation process leading to PS25/19 identified several key problems with the status quo:

Fragmented reporting: Five separate returns with inconsistent definitions and frequencies created unnecessary complexity and duplication
Outdated taxonomy: Product and service categories had not kept pace with market evolution, particularly in areas such as digital payments and novel investment products
Limited vulnerability data: Existing returns provided insufficient insight into whether vulnerable customers were experiencing different complaint outcomes
Analytical gaps: Regulators lacked the granular data needed to identify emerging harm trends early enough to intervene effectively

The new consolidated return addresses these concerns whilst aiming to reduce the overall reporting burden through streamlined submission requirements and more intuitive categorisation.

What Changes from 1 July 2026

Data Collection Commencement

The critical date for firms to understand is 1 July 2026. From this date, firms must begin collecting complaints data using the new taxonomy. This means your systems, processes, and staff must be ready to categorise complaints according to the new framework from day one of the reporting period.

It is essential to recognise that this is not the submission deadline but the start of data collection. Firms that are not operationally ready by 1 July 2026 will face significant challenges in producing accurate returns when the first submission falls due.

Consolidation of Existing Returns

PS25/19 replaces five existing complaints returns with a single consolidated return. The returns being retired include:

The standard complaints return (DISP 1 Annex 1R)
The separate payment services complaints return
The insurance-specific complaints return
The claims management complaints return
The sector-specific supplementary returns

This consolidation brings all complaints reporting into a unified framework with consistent definitions and categorisation approaches. Whilst this reduces the number of separate submissions firms must make, it does require careful mapping of existing data capture to ensure nothing is lost in translation.

New Reporting Frequency

The consolidated return moves to a six-monthly reporting frequency for all firms. This represents a change from the previous regime where larger firms reported more frequently than smaller ones. The FCA considers that six-monthly reporting strikes an appropriate balance between regulatory insight and firm burden.

The first reporting period runs from 1 July 2026 to 31 December 2026, with the submission deadline of 1 July 2027 giving firms six months after the period end to compile and submit their data. Subsequent returns will follow the same six-monthly cycle.

Revised Product and Service Taxonomy

Perhaps the most operationally significant change is the introduction of a completely revised product and service taxonomy. The FCA has undertaken a comprehensive review of how financial products and services should be categorised for complaints purposes, resulting in a more granular and up-to-date classification system.

Key changes to the taxonomy include:

Expanded payment services categories: Reflecting the growth of digital payments, open banking, and payment initiation services
Modernised investment categories: Better capturing the range of investment products now available to retail customers, including platform-based propositions
Refined insurance classifications: More granular breakdown of general and protection insurance products
New digital and cryptoasset categories: Recognising the emergence of regulated cryptoasset services and digital-first propositions
Enhanced credit categorisation: Distinguishing more clearly between different credit product types and their associated risks

Firms will need to map their existing product categorisations to the new taxonomy, which may require significant systems changes depending on how current data capture is structured.

Vulnerability Data Collection

One of the most significant new requirements is the collection of data relating to complaints from customers in vulnerable circumstances. The FCA has been clear that understanding whether vulnerable customers experience different complaint outcomes is essential to its supervisory objectives.

Under the new framework, firms must record and report:

Whether a complainant was identified as vulnerable at any point during the complaints process
The nature of the vulnerability where known (using specified categories aligned with FCA guidance FG21/1)
Outcomes data segmented by vulnerability status, enabling comparison of resolution rates, timescales, and compensation levels

This requirement will necessitate enhancements to many firms' complaints handling systems to capture vulnerability indicators and maintain this data through to reporting. It also reinforces the importance of training front-line complaints handlers to identify and record vulnerability appropriately.

Additional Data Fields

Beyond vulnerability data, the consolidated return introduces several additional data fields that firms must capture:

Root cause categorisation: More detailed classification of why complaints arose, enabling better analysis of systemic issues
Channel of receipt: How the complaint was received, reflecting the growth of digital complaint channels
Resolution method: Whether complaints were resolved through standard processes, ADR, or other mechanisms
Redress information: More granular data on compensation and redress provided

Implementation Requirements: What Firms Must Do

System and Process Changes

The scope of system changes required will vary significantly depending on your firm's current complaints management infrastructure. At minimum, most firms will need to:

Update complaints categorisation fields: Systems must be configured to capture data according to the new taxonomy from 1 July 2026
Implement vulnerability data capture: If not already in place, systems must enable recording of vulnerability status and category
Revise data extraction processes: Reporting extracts will need to map to the new return format
Update management information: Internal MI should reflect the new categories to maintain alignment between operational reporting and regulatory submissions

Firms using third-party complaints management systems should engage with their providers now to understand implementation timelines and any additional costs involved. Those with bespoke systems face potentially more significant development work.

Staff Training

Complaints handlers and those responsible for complaints categorisation will need training on:

The new product and service taxonomy and how to apply it consistently
Enhanced vulnerability identification and recording requirements
Any changes to complaints handling procedures arising from the new framework
The importance of accurate data capture for regulatory reporting purposes

Training should be completed before 1 July 2026 to ensure staff are ready to apply the new requirements from day one. Firms may wish to run parallel data capture during a transition period to test the new processes before go-live.

Data Migration and Mapping

Firms will need to determine how to handle the transition from old to new categorisation:

Historical data: The FCA does not require retrospective recategorisation of historical complaints, but firms may wish to undertake mapping exercises for trend analysis purposes
In-flight complaints: Complaints open at 1 July 2026 should be categorised under the new taxonomy when they are resolved and reported
Category mapping: Where existing categories do not map directly to new ones, firms must establish clear rules for how complaints will be categorised going forward

Governance and Oversight

Boards and senior management should receive updates on implementation progress and be prepared to review and sign off final reporting before submission. The SM&CR responsibilities for regulatory reporting apply to the new return, making accurate submission a matter of individual accountability.

Firms should also consider whether their complaints governance more broadly needs updating to reflect the enhanced data now being captured. The new vulnerability and root cause data, in particular, should be used to drive improved customer outcomes, not merely compiled for regulatory purposes.

Key Dates and Deadlines

Firms should note the following critical dates:

| Date | Milestone | |------|-----------| | Now - June 2026 | Implementation planning and execution | | 1 July 2026 | Data collection under new taxonomy commences | | 31 December 2026 | End of first reporting period | | 1 July 2027 | First submission deadline (H2 2026 data) | | 1 January 2028 | Second submission deadline (H1 2027 data) |

The six-month lag between period end and submission deadline provides reasonable time for data compilation and quality assurance, but firms should not underestimate the effort required, particularly for the first submission.

Implementation Project Planning

Given the scope of changes required, firms should be treating this as a formal implementation project rather than routine regulatory change. Key workstreams to consider include:

Phase 1: Assessment (Now - April 2026)

Gap analysis comparing current data capture to new requirements
System assessment to identify necessary changes
Resource and budget planning
Vendor engagement for third-party systems
Project governance establishment

Phase 2: Build (April - June 2026)

System development and configuration
Process documentation and updates
Training material development
Testing regime design
Parallel running preparation

Phase 3: Testing and Training (May - June 2026)

User acceptance testing of system changes
Staff training delivery
Process dry runs
Issue identification and resolution
Go-live readiness assessment

Phase 4: Go-Live and Stabilisation (July 2026 onwards)

New taxonomy in production use
Early issue identification and resolution
Data quality monitoring
MI production and review
Preparation for first submission

Common Implementation Challenges

Based on experience with similar regulatory reporting changes, firms should anticipate and plan for several common challenges:

Data Quality Issues

The introduction of new data fields invariably reveals data quality issues that were previously hidden. Firms should implement robust validation at the point of data capture and establish clear escalation routes for queries about how to categorise unusual complaints.

Inconsistent Application

Different complaints handlers may interpret the new taxonomy differently, leading to inconsistent categorisation. Clear guidance materials, worked examples, and quality assurance checking are essential to achieving consistency.

System Integration Gaps

Where complaints data is captured in one system but reported from another, ensuring the new data fields flow correctly through integrations can be challenging. End-to-end testing is essential.

Resource Constraints

Implementation projects compete for limited change capacity. Securing appropriate prioritisation and resources early in the planning process is important.

How MEMA Can Help

The transition to the new complaints reporting taxonomy represents a significant compliance challenge, but also an opportunity to enhance your complaints handling arrangements more broadly. MEMA Consultants has extensive experience helping firms navigate regulatory reporting changes and can support your implementation in several ways.

Our services include:

Gap analysis and readiness assessment to identify what your firm needs to do and by when
Implementation project management to ensure disciplined delivery against regulatory deadlines
System requirements specification to help you brief internal or external developers on necessary changes
Process design and documentation for updated complaints handling procedures
Training programme development and delivery for complaints handlers and supervisors
Data quality assurance frameworks to ensure accurate regulatory reporting
Mock submission reviews to identify issues before formal submission to the FCA

Our team includes former regulatory professionals who understand exactly what supervisors will be looking for in your submissions, combined with practical implementation expertise from helping firms across the sector prepare for regulatory change.

With just over three months until data collection commences, now is the time to ensure your implementation is on track. Contact us today for a confidential discussion about how we can support your transition to the new complaints reporting regime.

About the Author

The MEMA Regulatory Team comprises former FCA supervisors and experienced compliance consultants with deep expertise in complaints handling, regulatory reporting, and Consumer Duty compliance across all FCA-regulated sectors.

This article is for general guidance only and does not constitute legal or regulatory advice. Firms should seek independent professional advice tailored to their specific circumstances.