The Financial Services Act 2012 (Relevant Functions in relation to Complaints Scheme) (Amendment) Order 2026

The Financial Services Act 2012 (Relevant Functions in relation to Complaints Scheme) (Amendment) Order 2026 (S.I. 2026/726) significantly updates the scope of functions for which the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) can face complaints under the statutory complaints scheme. Coming into force on 23rd July 2026, this Order amends the Financial Services Act 2012 (Relevant Functions in relation to Complaints Scheme) Order 2014 (S.I. 2014/1195). The key changes include extending the FCA's relevant functions to encompass certain supervisory activities under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, and clarifying the PRA's functions relating to securitisation and markets in financial instruments. This amendment aims to enhance accountability for the regulators by broadening the avenues for redress concerning their administrative actions, while maintaining exclusions for their legislative and guidance-issuing roles.

The landscape of financial regulation in the United Kingdom is continuously evolving, driven by the imperative to maintain market integrity, protect consumers, and ensure financial stability. A crucial, albeit often overlooked, aspect of this framework is the mechanism for holding regulators themselves accountable. The Financial Services Act 2012 (Relevant Functions in relation to Complaints Scheme) (Amendment) Order 2026 (S.I. 2026/726), set to come into force on 23rd July 2026, represents a targeted yet important recalibration of this accountability.

This new Order directly amends the Financial Services Act 2012 (Relevant Functions in relation to Complaints Scheme) Order 2014 (S.I. 2014/1195), which defines the 'relevant functions' of the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) for the purposes of the statutory complaints scheme established under Part 6 of the Financial Services Act 2012 (c. 21). For legal professionals, understanding these amendments is vital, as they expand the potential grounds for complaints against the regulators, particularly concerning their supervisory roles in critical areas like anti-money laundering and market oversight. This article will delve into the background of the complaints scheme, analyse the specific changes introduced by the 2026 Order, and discuss the practical implications for firms and practitioners.

The Financial Services Act 2012 (FSA 2012) fundamentally reshaped the UK's financial regulatory architecture, replacing the Financial Services Authority (FSA) with a twin peaks model comprising the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). This legislative overhaul was a direct response to the 2007-2008 financial crisis, aiming to establish a more robust framework focused on consumer protection, market integrity, and promoting competition. Part 6 of the FSA 2012 mandates that the FCA, PRA, and the Bank of England establish a scheme for the independent investigation of complaints arising from the exercise, or failure to exercise, their 'relevant functions'.

The Financial Services Act 2012 (Relevant Functions in relation to Complaints Scheme) Order 2014 (S.I. 2014/1195) was the initial instrument that specified these 'relevant functions'. For the FCA, these initially included functions under the Regulated Covered Bonds Regulations 2008, the Payment Services Regulations 2009, the Electronic Money Regulations 2011, and the Payments in Euro (Credit Transfers and Direct Debits) Regulations 2012, explicitly excluding their guidance-giving functions. The PRA's relevant functions were also defined, primarily relating to its prudential oversight. This framework ensures that while the Financial Ombudsman Service (FOS) handles complaints against financial firms, a separate, statutory mechanism exists for individuals and firms to complain about the regulators' own administrative actions, rather than their broader legislative or policy-making roles.

The Financial Services Act 2012 (Relevant Functions in relation to Complaints Scheme) (Amendment) Order 2026 (S.I. 2026/726) introduces several critical amendments to the 2014 Order, primarily expanding the scope of the FCA's and PRA's functions subject to the complaints scheme. Notably, the Order extends the FCA's relevant functions to include its supervisory activities under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692). This is a significant development, as it brings the FCA's oversight of firms' anti-money laundering (AML) compliance within the purview of the complaints scheme, allowing for independent investigation into alleged maladministration in this crucial area. However, it is important to note that the FCA's functions of making technical standards and giving general guidance under these regulations remain excluded, preserving the distinction between administrative and legislative/policy functions.

Furthermore, the 2026 Order clarifies and amends the FCA's relevant functions concerning the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (S.I. 2017/701), again specifically excluding functions related to preparing and issuing statements of policy. This refinement ensures that while the FCA's operational application of MiFID II-related regulations is subject to scrutiny, its broader policy-setting remains outside the direct complaints mechanism. For the PRA, Article 3 of the 2014 Order is substituted entirely, bringing functions related to securitisation and markets in financial instruments within its relevant functions, with similar exclusions for policy statement issuance. This reflects the evolving regulatory landscape and the increasing importance of these areas in prudential oversight.

The rationale behind these amendments, as indicated by the accompanying explanatory material, is partly to address a defect in the original 2014 Order and to ensure comprehensive coverage of the regulators' administrative functions. By broadening the scope, the Order aims to enhance transparency and accountability of the FCA and PRA in their day-to-day supervisory and enforcement activities. This aligns with the broader objectives of the FSA 2012 to foster confidence in the financial sector. The careful delineation between 'relevant functions' (administrative actions) and excluded functions (legislative, guidance, policy-making) is crucial. It prevents the complaints scheme from becoming a mechanism for challenging regulatory policy itself, instead focusing on the proper exercise of delegated powers and duties. This distinction is vital for maintaining regulatory independence and effectiveness while providing a channel for redress against administrative failings.

The Financial Services Act 2012 (Relevant Functions in relation to Complaints Scheme) (Amendment) Order 2026 represents a targeted yet impactful enhancement of the accountability framework for the UK's financial regulators. By expanding the 'relevant functions' of the FCA and PRA to include critical areas such as anti-money laundering supervision, securitisation, and market in financial instruments, the Order provides greater avenues for individuals and firms to seek redress for alleged maladministration.

For practising attorneys and legal professionals, it is imperative to familiarise themselves with these changes. Firms regulated by the FCA and PRA should review their internal complaints handling procedures and compliance frameworks in light of the expanded scope of regulatory functions that can now be subject to external complaint. Understanding the precise boundaries of these 'relevant functions' – particularly the exclusions for legislative and guidance-issuing activities – will be key to advising clients effectively on the viability of complaints against the regulators. Practitioners should monitor the implementation of this Order and any subsequent guidance from the regulators or the Financial Regulators Complaints Commissioner to fully grasp its practical implications and ensure robust client representation.