The FCA has published CP26/32: Quarterly Consultation No. 53, which includes a proposal in Chapter 6 to remove the Handbook reference to the Society of Lloyd’s two-stage complaints process. Responses to Chapters 2 to 8, including Chapter 6, are requested by 12 October 2026.
At present, Lloyd’s operates a two-stage complaints process. First, the Lloyd’s managing agent reviews the complaint and provides a response within two weeks. If agreement is not reached, the complainant can escalate the complaint to Lloyd’s for an independent review and final response, typically within eight weeks.
Lloyd’s is now seeking to move to a single-stage complaints process, under which managing agents would be solely responsible for handling complaints. Lloyd’s would no longer have direct contact with complainants as part of the ordinary process but would retain a residual power to intervene in individual complaints where it considers this necessary, including the power to mandate redress in appropriate cases.
For Lloyd’s managing agents, coverholders, brokers and firms involved in Lloyd’s distribution or claims chains, this is a practical change. It would simplify the complaints journey, but it also places greater responsibility on managing agents to investigate, evidence and resolve complaints properly at the first and only stage.
Key Highlights:
Lloyd’s wants to move from two stages to one
The current Lloyd’s process involves a managing agent review followed, where needed, by escalation to Lloyd’s for independent review. The FCA notes that Lloyd’s received 7,400 UK complaints in 2025, of which 10% proceeded to Stage 2.
Under the proposed model, the managing agent would handle the complaint through a single process and issue the final response within the usual eight-week timeframe. Lloyd’s would retain a residual intervention power but would no longer be the standard second-stage reviewer.
FCA proposes amending DISP 1.11.8G
The Lloyd’s two-stage process is currently reflected in the FCA Handbook at DISP 1.11.8G. The FCA therefore needs to amend the Handbook to enable Lloyd’s to move to the proposed single-stage approach.
The FCA’s view is that the change would bring Lloyd’s complaint handling more closely into line with the FCA’s expectations for other firms. It does not consider there is a clear justification for holding Lloyd’s to a different standard, provided customers remain appropriately protected.
Customers would have a simpler route to FOS
The FCA considers that complainants would benefit from a simpler process because they would deal with one party rather than two, except where Lloyd’s exercises its residual power to intervene.
Where complainants are dissatisfied with the managing agent’s final response, they would be able to refer the complaint directly to the Financial Ombudsman Service, rather than first escalating through Lloyd’s second stage.
Managing agents would have more time, but more responsibility
Managing agents would move from providing a Stage 1 response within two weeks to having up to eight weeks to investigate and issue a final response. The FCA suggests this could allow managing agents to produce better-analysed responses and maintain a single complaints process across their business.
This is positive operationally, but it also raises the standard of first-stage complaint handling. Managing agents will need to ensure that complaint investigations, claims evidence, policy interpretation, customer communications, vulnerability considerations and redress decisions are robust enough to stand without Lloyd’s mandatory second-stage review.
FOS referrals may increase
The FCA notes that moving to a single-stage process would likely mean more complainants being referred to the Financial Ombudsman where they are dissatisfied with a managing agent’s decision. Lloyd’s analysis suggested that approximately 600 more complaints would have gone to FOS over a 12-month period covering H2 2024 and H1 2025, although Lloyd’s expects the actual number to be lower.
This means managing agents should expect greater scrutiny of final responses, evidence packs and complaint decision-making by FOS
What Firms Should Do Now
Review Lloyd’s Complaint Handling Procedures
Lloyd’s managing agents should review complaint procedures, templates, operating processes and escalation routes to ensure they work effectively under a single-stage model.
Strengthen Complaint Investigation Quality
The removal of Lloyd’s mandatory second-stage review means managing agents should be able to evidence that the complaint has been fully investigated before the final response is issued. This includes claims files, underwriting material, policy wording, broker correspondence, call notes, delegated authority records, vulnerability evidence and redress rationale.
Review FOS Readiness
If more complaints move directly from managing agent final response to FOS referral, firms should ensure complaint files are FOS-ready at the point the final response is issued. This includes clear chronology, decision rationale, supporting evidence and a record of any redress considered or offered.
Update Governance and MI
Boards, committees and senior managers should receive MI showing complaint volumes, root causes, uphold rates, FOS referrals, FOS outcomes, repeat themes, vulnerable customer issues, delegated authority issues and remedial action.
Check Delegated Authority and Claims Arrangements
Managing agents should ensure coverholders, TPAs, claims handlers, brokers and other parties in the chain provide timely and complete information to support complaint investigations. Weak evidence flow could become more visible under a single-stage process.
Clarify Lloyd’s Residual Intervention Route
Although Lloyd’s would no longer be a mandatory second-stage reviewer, it would retain a residual power to intervene in individual complaints where necessary. Firms should understand when Lloyd’s may intervene, how issues should be escalated and how redress mandates would be managed.
Consider Responding to the Consultation
Firms affected by the proposed change should consider responding before 12 October 2026, particularly where they have views on customer protection, operational readiness, FOS impacts, Lloyd’s residual oversight or the practical transition to a single-stage process.
The FCA’s proposal is a targeted Handbook change, but it has practical significance for Lloyd’s managing agents and firms operating within Lloyd’s distribution and claims chains.
The change should simplify the customer journey and align Lloyd’s more closely with standard FCA complaints handling expectations. However, it also means managing agents will carry greater responsibility for getting the complaint outcome right at the first and only stage.
Complaint investigations will need to be more complete, final responses more robust, evidence packs better prepared and governance MI more insightful. Firms that treat this as a process simplification only may miss the wider conduct point: under a single-stage model, the quality of the managing agent’s complaint handling becomes even more important.
How We Can Help
We support insurers, Lloyd’s managing agents, MGAs, intermediaries and firms operating in delegated authority models with complaint handling and conduct governance. In relation to CP26/32 Chapter 6, we can assist by:
- assessing the impact of the proposed single-stage Lloyd’s complaints process;
- reviewing complaints policies, procedures and final response templates;
- mapping complaint ownership across managing agents, coverholders, TPAs, brokers and outsourced providers;
- reviewing FOS readiness and evidence standards;
- strengthening root-cause analysis and complaint MI;
- reviewing delegated authority and claims-handling complaint flows;
- supporting Board and committee reporting on complaints and customer outcomes;
- preparing consultation responses;
- training complaint handlers, claims teams and senior managers..
Our team can help firms ensure complaint handling arrangements remain clear, evidence-led and customer-focused as the Lloyd’s process moves towards a single-stage model.