HMT consultation response confirms package of reforms to the FOS

HM Treasury has published its response and final plans for reform of the UK Financial Ombudsman Service (FOS) following its July 2025 consultation. The reforms are intended to restore the FOS to its original role as a simple, impartial dispute resolution body (to prevent it acting as a quasi-regulator), to improve regulatory coherence with the UK Financial Conduct Authority (FCA) and to provide greater certainty and predictability for consumers and firms who use the FOS. Following feedback, the government confirms it will:

• Legislate to align FOS's "fair and reasonable" test (used to determine cases) more closely with FCA rules, such that compliance with relevant FCA requirements will mean that firms have acted fairly and reasonably.
• Introduce a referral mechanism requiring the FOS to seek the FCA's view where it considers there may be ambiguity in what the FCA rules require or in relation to issues which may have wider implications across the financial services industry.
• Introduce a ten year time limit for bringing complaints (subject to any exceptions to this limit made by the FCA).
• Make structural changes to provide greater consistency in decision making, giving the Chief Ombudsman overall responsibility for determinations.
• Introduce a requirement for the FCA and FOS to publish regular thematic reports providing useful information on how the FOS will consider certain types of complaints.
• Ensure the FCA has the relevant tools it needs to respond to mass redress events.

The government confirms that it will not proceed with making the FOS a subsidiary of the FCA, as initially proposed, but will legislate to make the government responsible for appointing the Chair of the FOS and the appointment of the FOS Chief Ombudsman subject to government approval.

On the same day, a joint consultation paper was published by the FCA and the FOS seeking views on proposed changes to the rules they each make, currently set out in the Dispute Resolution: Complaints sourcebook (DISP). The changes requiring primary legislation will be delivered when parliamentary time allows.

Return to main website.