The Financial Ombudsman Service (FOS) has announced a series of changes aimed at transforming the way it operates to improve its service for consumers and firms.
This includes a new registration stage which will ensure cases are within scope and ready to be investigated, as well as new powers to dismiss complaints so that the ombudsman can focus resources on the cases the service was originally set up to resolve.
The measures form part of a wider package of reforms to the redress system – including legislative changes – to support confidence in financial services, so that consumers get fair and quick compensation when things go wrong, and regulated firms have more certainty to invest, grow and compete.
FOS maintained consumers and firms will benefit from a more efficient service as new measures announced today mark the next step in a series of reforms to streamline and modernise the complaints process.
Following a joint consultation with the Financial Conduct Authority (FCA), FOS confirmed that the changes will be rolled out to operations to allow it to focus resources on the cases it was set up to resolve as a quick and informal alternative to the courts.
These reforms include an amendment to rules to provide greater clarity that its decisions are based on the standards applicable at the time of the act or omission complained about – and will not be applied retrospectively.
This will aim to provide a foundation for proposed legislative changes to the ‘fair and reasonable’ remit which are currently progressing through Parliament.
Dismissing inappropriate claims
The reforms include new powers to dismiss complaints that are not appropriate for the Financial Ombudsman and may be better resolved – or are already being investigated – in other ways.
These include complaints that may be better suited to court, law enforcement, another dispute resolution process, or where there has been no financial loss or material distress or inconvenience. These will come into effect on 1 October 2026.
New registration stage
But a new registration stage will also be rolled out next year, following a consultation on differential case fees later this year, to ensure that complaints referred to our service are within scope and ready to be investigated before being allocated to a caseworker. This will continue the service’s work on providing a fairer funding model to better reflect costs and support earlier resolution of disputes.
First joint thematic review
Later this year, FOS will publish the first of its joint thematic reviews with the FCA to provide more insight on the types of complaints it sees and its approach to resolving them.
This will aim to help inform firms’ own complaints handling, prevent similar cases from needing to be escalated to FOS, and demonstrate how outcomes are aligned with regulators’ rules.
Redressing the system
James Dipple-Johnstone, chief ombudsman at the Financial Ombudsman Service, said: “We are driving forward reforms to bring consistency and predictability to the redress system – helping to underpin confidence in financial services, ensuring major or emerging issues are escalated earlier, and supporting firms with better insight to help them address and resolve customer issues more effectively and proactively.
“This is an important part of the wider package of reforms, and we will continue to work closely with the government, the FCA, consumer groups and industry stakeholders on this significant transformation of the redress system and the way our service operates within it.”
Wider series of steps
The changes are part of a wider series of steps FOS has taken to modernise its service. This includes an updated memorandum of understanding with the FCA to ensure its decisions are aligned with regulatory rules, charges for professional representatives to refer cases to ensure costs are fairer and cases are better evidenced, and changes to the interest rate applied to some of the awards that we make to better reflect present economic conditions.
It has also delivered a series of digital improvements – with online portals for businesses and consumers rolled out and an enhanced online complaint form streamlining and simplifying the complaint journey – as part of its drive to make its service increasingly easy to use for customers.
Legislative changes, to the way the redress system and FOS operates, are progressing through Parliament in the Financial Services and Markets Bill.