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What is a consumer redress scheme?

Since 2010, under section 404 of the Financial Services and Markets Act 2000 (FSMA 2000), the Financial Conduct Authority (FCA) and its predecessor, the Financial Services Authority (FSA) have had powers to make rules requiring a firm, or firms, to establish and operate a consumer redress scheme. General guidance on consumer redress schemes, and the FCA’s powers in relation to them, is set out in Chapter 1 of the Consumer Redress Schemes sourcebook in the FCA Handbook (CONRED).

A consumer redress scheme is a set of rules under which a firm is required to take one or more of the following steps:

1. •

   investigate whether, on or after a specific date, the firm has failed to comply with particular requirements that are applicable to an activity it has been carrying on

2. •

   determine whether the failure has caused (or may cause) loss or damage to consumers

3. •

   if the firm determines that the failure has caused (or may cause) loss or damage to consumers, the firm must then determine what the redress should be in