On 16 March 2026, alongside CP26/9 on modernising the redress system, the FCA published FG26/2 — finalised guidance on good and poor practice in identifying and rectifying harm. It took effect immediately. It applies to firm-led redress exercises of any scale, and it answers a question firms have been asking for years: when something has gone wrong for customers, what does the regulator actually expect you to do? The guidance walks the full lifecycle — root cause analysis and scoping, deciding on remedial action, whether to run an opt-in or opt-out approach, how to communicate with affected customers, and how to monitor whether the exercise is working.
The central idea is proactivity. The guidance is built around firms taking the initiative — deciding for themselves whether they owe customers remedial action, and providing the remedy without customers having to complain. The FCA's stated objectives are to help firms identify potential harm early, resolve it (including by proactively offering redress), encourage a more consistent approach between firms, and communicate with consumers so they understand what is happening. Redress that only reaches the people who shouted loudest is not, in this framing, redress at all.
Treating the complaint population as the problem population is the most common failure in remediation.
The poor-practice examples are the most instructive part. One describes a firm that had open complaints connected to an issue, assessed them in line with Ombudsman decisions, and offered redress where appropriate — but chose not to identify other affected customers who hadn't complained, even though the redress was significant. The FCA's verdict was that the issue was not truly addressed. That single example captures the most common failure in remediation: treating the complaint population as the problem population. If your scoping starts and ends with the people who contacted you, your exercise is measuring your complaints process, not the harm.
The guidance is also specific about communications — drafting templates, presenting information in a logical order, avoiding unnecessary disclaimers, and giving customers adequate time to respond. And it ties the exercise back to the Consumer Duty, which requires firms to act to deliver good outcomes for retail customers; a redress exercise is one of the moments where that obligation is most visible. FG26/2 sits alongside the Handbook rather than replacing it, and points to connected provisions including DISP and the SUP 15 notification guidance. In other words, it isn't optional colour. It is the standard against which your next remediation will be read.
What firms should do
- Scope from the harm, not the complaints. Identify everyone affected, not just those who complained — that distinction is the FCA's clearest poor-practice marker.
- Do root cause analysis properly and early, and let it drive the scope — how long the issue ran, which products and channels it touched — rather than the other way round.
- Choose opt-in or opt-out deliberately, and be able to explain why your approach reaches affected customers rather than filtering them out.
- Write communications to be understood: logical order, plain language, no unnecessary disclaimers, and enough time to respond.
- Monitor effectiveness while the exercise is running — response rates, redress paid, customers not reached — and act on what it shows.
- Read FG26/2 against your existing remediation playbook and close the gaps now, while you're not under pressure.
Sources: FCA FG26/2, Finalised Guidance on good and poor practice in identifying and rectifying harm (16 March 2026); FCA/FOS CP26/9, Modernising the Redress System (16 March 2026); Freshfields, Hogan Lovells, HFW and Auxillias commentary (March–April 2026).