Consumers and firms will benefit from a more efficient Financial Ombudsman 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), the Financial Ombudsman has confirmed that it will introduce changes to its operations to allow it to focus its 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 the Financial Ombudsman’s decisions are based on the standards applicable at the time of the act or omission complained of and will not be applied retrospectively. This provides a foundation for proposed legislative changes to the ‘fair and reasonable’ remit which are currently progressing through Parliament.
- 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, or 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.
- A new registration stage to be rolled out next year, following a consultation on differential case fees later this year, to ensure that complaints referred to the service are within its scope and ready to be investigated before being allocated to a caseworker. This will continue the service’s work to provide a fairer funding model to better reflect costs and support earlier resolution of disputes.
Later this year the Financial Ombudsman will publish the first of its joint thematic reviews with the FCA to provide more insight on the types of complaints the service sees and its approach to resolving them. This will help to inform firms’ own complaints handling and prevent similar cases from needing to be escalated to the Ombudsman and also demonstrate how outcomes are aligned with regulators’ rules.
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.”
The changes announced today are part of a wider series of steps the Financial Ombudsman Service 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 the Financial Ombudsman makes to better reflect present economic conditions.
The service 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 be increasingly easy to use for customers.
Legislative changes to the way the redress system and the Financial Ombudsman Service operate are progressing through Parliament in the Financial Services and Markets Bill.
The full policy statement can be downloaded here.
