What does the financial ombudsman do?

The Financial Ombudsman Service, also known as the FOS, handles complaints about most bank accounts, investment products, mortgages, loans, some pension products, PPI claims, insurance policies, credit and store cards, HP agreements and financial advice.

It was originally set up to provide a speedy and cheap way to resolve disputes between financial companies and their customers without having to go to court. 

You must have reached a final response in your dispute with a bank, insurance company or other financial provider and still be unhappy with it before you can take your complaint to the financial ombudsman. 

This means you'll need to go through the internal complaints procedure of the bank, insurance company or other financial provider that you’re complaining about. 

If the provider still hasn’t resolved your complaint within eight weeks, they've rejected your complaint, or you're unhappy with their final response, you can then take your complaint to the FOS. 

The Financial Ombudsman Service is free for consumers to use and details of the ombudsman should be listed in your provider's final letter. 

In some cases you will be directed to another ombudsman service, such as the Pensions Ombudsman, which deals with issues around the administration of complaints - but the Financial Ombudsman will be able to point you in the right direction.

Follow our step-by-step guide on how to take your complaint to the Financial Ombudsman Service.

Typical complaints the Financial Ombudsman Service deals with

Typical complaints can include:

  • being turned down for an insurance payment unfairly 
  • being sold a financial product without understanding the risks involved 
  • charges being applied to financial services incorrectly.

You can also complain to the FOS if you've been a victim of credit or debit card fraud and your bank refuses to reimburse you the money that has been taken from your account. 

If you wish to complain to the Financial Ombudsman Service about a bank dispute, you can use our template letter to help.

From 1 April 2019, the FOS compensation limit will increase from £150,000 to £350,000 for complaints about actions taken by firms on or after that date.

This means if you make a complaint about something a firm did wrong on or after 1 April 2019, you could be awarded compensation of up to £350,000.

If you make a complaint about a firm for something it did wrong before 1 April 2019, the compensation award limit will be £160,000.

How do I complain to the Financial Ombudsman about PPI?

If your mis-sold PPI claim is rejected or if you're not sure whether the amount you've been compensated is correct, you can complain about it to the financial ombudsman.

You can also complain to the financial ombudsman about PPI if your bank or provider takes longer than eight weeks to get back to you. 

It's free to appeal to the financial ombudsman, but due to the volume of PPI complaints it can take a while to get a refund.

Which? can help you start your PPI claim for free, which means you'll keep all your compensation if your provider finds you were mis-sold PPI.

More than 200,000 people have already used the free Which? PPI tool to start their claim, and in 2018 we saw an average compensation payout of £2,500 – one person we spoke to received more than £18,000.

Complaints the Financial Ombudsman Service usually can't deal with

Any complaints that are received have to be considered. But not all financial complaints can be dealt with by the ombudsman, and it can be frustrating if it has to return a complaint rather than take it forward.

The Financial Ombudsman Service may not be able to help in the following situations:

  • if your financial complaint is solely about the way an investment has performed, rather than if you weren't aware of the risks involved
  • if the business you want to complain about isn't regulated
  • if your case has already been considered by the courts
  • if you're making a complaint on behalf of a business that has an annual turnover of more than €2 million, or a business that has more that ten staff members

How the Financial Ombudsman reaches decisions

An adjudicator will investigate your complaint and reach an opinion based on all of the information. 

If either party is unhappy with the decision, it can ask for an Ombudsman to consider the complaint. 

An Ombudsman will consider the complaint afresh and reach his or her own opinion. 

Is the Financial Ombudsman’s decision final?

If you accept the Financial Ombudsman Service's decision, it's legally binding on both you and the business. 

The provider is bound by the Financial Ombudsman Services findings and final decisions from the financial ombudsman are legally enforceable. 

So if the business doesn't comply, you can ask a court to make them do what the financial ombudsman has said. 

If you don't accept the decision, then it is not binding and you are free to pursue the matter further through the courts.

Going to court

If you're dissatisfied with a FOS decision, you can consider court action. But this can prove costly, so get legal advice on whether it might be a realistic option.

Its also worth seriously considering whether a judge is likely to rule any differently than the Financial Ombudsman Service ruling. 

It will be most costly if your claim exceeds a certain level, as you'll have to use the civil court and not the small claims court. 

The total you can claim in England and Wales is £10,000, in Scotland it's £5,000 and in Northern Ireland it's £3,000.

If the value of the claim exceeds these limits, you'll need a solicitor, and a barrister for complex cases – and court costs can be high. 

If you lose, you may have to pick up the other side's costs too.

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