FCA Expectations for Complaints Handling in Payment Firms: A Practical Guide

Complaints handling is both a regulatory obligation and a critical indicator of the firm's relationship with its customers. For payment institutions and EMIs, effective complaints handling is not just about resolving individual disputes: it is about identifying systemic issues, improving products and services, and demonstrating to the FCA that the firm is delivering good customer outcomes. This article provides a practical guide to FCA complaints handling requirements for payment firms.

DISP Rules for Payment Firms

The FCA's Dispute Resolution (DISP) rules set out the requirements for complaints handling. The complaints handling rules in DISP 1 apply to payment institutions and EMIs, including small payment institutions, for complaints about payment services and e-money.

Definition of a complaint. Any expression of dissatisfaction, whether oral or written, about the firm's provision of, or failure to provide, a financial service or product. The threshold is low: firms should not apply overly narrow definitions that exclude legitimate complaints.

Acknowledgement. DISP 1.6.1R requires a prompt written acknowledgement that reassures the customer the complaint is being dealt with and says when the firm will respond next. Many firms set an internal standard of a few business days.

Response timelines. For payment-related complaints, a final response must be provided within 15 business days of receipt. Where the delay is for reasons beyond the firm's control, the firm must send a holding response within 15 business days explaining why, and give a final response within 35 business days. For complaints about other activities, the standard 8-week deadline applies, and firms may choose to handle the whole complaint under the shorter payment services timetable.

Final response. The final response must address the complaint substantively, explain the firm's conclusions and any redress offered, and inform the customer of their right to refer the complaint to the Financial Ombudsman Service (FOS) if dissatisfied.

Referral to FOS. If the firm cannot resolve the complaint within the relevant timeframe, or if the customer is dissatisfied with the final response, the customer can refer the matter to the FOS, normally within six months of the final response. From 1 April 2026, the FOS can award up to £455,000 for complaints about acts or omissions on or after 1 April 2019.

Consumer Duty Integration

The Consumer Duty applies to authorised payment institutions and EMIs in their dealings with retail customers. It elevates complaints handling from a reactive process to a proactive compliance function. Under the Duty, firms must:

Analyse complaint data for root causes. Individual complaints may indicate systemic issues with products, processes or communications. The FCA expects firms to conduct regular root cause analysis and to take corrective action where patterns emerge.

Use complaints data for outcomes monitoring. Complaint volumes, themes, resolution times and customer satisfaction indicators are key inputs for Consumer Duty outcomes monitoring. The board should receive regular reporting on complaint trends and their implications.

Ensure fair outcomes. Complaint resolution must deliver fair outcomes for customers. This includes appropriate redress, timely resolution and clear communication throughout the process.

Building an Effective Complaints Framework

1. Clear complaint identification. Train all customer-facing staff to recognise and record complaints, including verbal expressions of dissatisfaction.
2. Centralised complaint management. Implement a central complaint management system that tracks all complaints from receipt through resolution, with automated timeline alerts.
3. Skilled investigators. Ensure complaint investigators have adequate training, authority and access to systems to investigate complaints thoroughly and fairly.
4. Root cause analysis. Conduct quarterly root cause analysis of complaint themes and report findings to senior management with recommended corrective actions.
5. FOS liaison. Maintain a clear process for FOS referrals, including timely response to FOS enquiries and analysis of FOS decisions for implications.
6. Regulatory reporting. Submit the annual payment services and e-money complaints return (DISP 1 Annex 1AD) within 30 business days of the end of each reporting period.

What Firms Should Do Now

1. Review your complaints handling framework against DISP requirements and Consumer Duty expectations.
2. Assess whether complaint identification is comprehensive: are you capturing all expressions of dissatisfaction?
3. Implement root cause analysis if not already in place.
4. Ensure complaint data is reported to the board as part of Consumer Duty outcomes monitoring.
5. Train all staff on complaint identification and handling procedures.

Regulatory Counsel advises payment firms on complaints handling framework design, Consumer Duty integration and FCA compliance. Contact us for a written proposal.