Health insurance and financial advice offered on social media could generate more complaints in the coming year, the Financial Ombudsman Service (FOS) has been warned.
The regulator highlighted that some respondents to its consultation for its 2025-26 plans and budget thought these were areas which were likely to increase.
“Increased financial advice through social media, and the growth in health insurance cover due to ongoing NHS resource constraints, were noted by some respondents as possible drivers for new complaint types and issues we might receive,” it said.
In March the FOS revealed private medical and dental insurance and income protection were seeing more complaints with 33% and 39% more cases respectively compared to the third quarter of 2023.
The FOS also heard from some respondents who believed its minimum fees for claims management companies (CMCs) and other professional representatives would not prove a strong enough deterrent.
“A few respondents agreed with our expectation that the volume of cases we would receive will fall, but others felt we will continue to see a high volume of cases from representatives as they considered [the] maximum fee of £250 to be too low,” it said.
It is forecasting that professionally represented cases received will fall by two thirds from 175,300 in 2024-25 to 59,100 in 2025-26.
“Latest forecasts for 2024/25 and 2025/26 reflect the significantly increased number of cases brought by professional representatives,” the FOS said.
“We expect this to reduce in 2025-26 due to the impact of charging professional representatives from 1 April 2025.”
And there was also an expectation that Consumer Duty-related cases would begin to come through, although this was not yet being seen in industry trends.
Fees and levies unchanged
As originally planned in December the ombudsman is keeping its fees and levies for advisers and intermediaries unchanged from the 2024-25 year.
Overall, the ombudsman revised down its budget for 2025-26 to £278m from its original estimate of £292m – although this is up from the £236m being spent in 2024-25.
This is due to the number of cases it expects to handle dropping from 240,000 in its December estimate to 209,000.
However, this is despite the number cases it is expecting to have handled in 2024-25 soaring to 330,000.
The regulator added it was planning to resolve 45,000 more complaints in 2025-26 than in 2024/25 – a 20% increase year-on-year.
Motor drives insurance complaints
Notably, the FOS expects the number of insurance cases to be the same as this year at around 45,600, slightly up from the 43,900 estimate at the end of last year.
Motor insurance is predicted to be the main driver of this again due to the higher cost of, and supply challenges around, parts and labour.
The FOS noted that at the end of March motor finance commission complaints accounted for 96,000 out of 190,000 outstanding complaints and due to the regulatory action underway it was assuming it would not be able to resolve most of these before December 2025.
Leadership changes
The FOS has seen a turbulent 2025 with CEO and chief ombudsman Abby Thomas stepping down in February.
This was followed a week later by chairwoman Baroness Manzoor announcing she would be stepping down from the organisation in August.
Writing in the plan and budget, interim chief executive officer Jenny Simmonds and interim chief ombudsman James Dipple-Johnstone said the changes in leadership did not change their commitment to the core purpose – resolving financial complaints for customers in a timely
manner.
“We start 2025-26 by continuing to address the exceptional demand we have experienced over
the last year and facing ongoing uncertainty around motor finance complaints,” they said.
“We never forget that behind each case are customers waiting for an answer.”
They noted that half of the 189,700 complaints waiting for a resolution were impacted by the Financial Conduct Authority (FCA) pause on motor finance complaints, while the remainder of the backlog had built up due to exceptional short-term demand in consumer credit and fraud and scams areas.
“Our plans and budget for 2025-26 aim to bring down the number of non-car commission cases
waiting for a resolution – despite the increasing complexity in some types of complaints, such
as fraud and scams,” they continued.
“Despite the challenge of increased caseloads and uncertainty around motor finance commission, we are pleased to take forward the proposals set out in our consultation to keep levies and our case fees flat, saving respondent firms around £70m in 2025-26 compared to pricing in 2023-24.”
