Press release

Hands off the Financial Ombudsman Service: Which?, MSE and leading charities demand halt to potentially devastating reforms

A coalition of some of the UK’s most prominent consumer campaigners and charities have today issued a statement calling on the Government to rethink potentially devastating legislative changes to the Financial Ombudsman Service (FOS), warning the shake-up could lock consumers out of free, independent redress.
4 min read

Which? and a coalition of 15 organisations including Money Saving Expert, Citizens Advice, Age UK, StepChange and Fairer Finance fear that proposed legislative changes to the FOS set out in the Financial Services and Markets Bill could ultimately prevent consumers accessing the redress they are entitled to, with potentially catastrophic results. The FCA has also warned against some of the changes, arguing that they would ‘gum up the system’.

The FOS offers an entirely free and impartial route for consumers to seek redress when they’ve been treated unfairly by a financial services company. When an individual is locked in a dispute with their bank or an insurer, it offers an absolutely vital safety net for individuals when something goes wrong.

Ultimately, if the FOS decides a business has treated a consumer unfairly, its decision is binding and can force the company to fix their mistake or offer compensation without an individual having to pursue time consuming or costly alternatives like court action.

At a time when the cost-of-living crisis has already pushed household budgets to breaking point, access to a fair, free and impartial Ombudsman service is more essential than ever to stop consumers being ripped off. 

In the statement, the coalition delivers a damning verdict on the proposed changes and calls on the Government to urgently rethink its plans.

Rocio Concha, Which? Director of Policy And Advocacy said: “For millions of families walking a financial tightrope, the Financial Ombudsman is an essential lifeline that stands between them and big business when something goes wrong.

“When many households are already stretched to breaking point, introducing reforms that risk making it slower and more challenging for people to access redress sends a chilling message: that when powerful institutions make costly mistakes, ordinary people will be left to pick up the pieces.”

Yvonne Fovargue, former MP for Makerfield, said: “Having represented the constituency and its people for 14 years, I am concerned that these changes to the Financial Ombudsman Service do not pass the Prime Minister’s Makerfield Test by making it harder for people to get fair access to redress.”

Notes to Editors:

Which? has today published a joint statement with a coalition of leading consumer organisation and debt advice charities, along with the former MP for Makerfield, Yvonne Fovargue.

Signatories include: Age UK, Centre for Responsible Credit, Christians Against Poverty, Citizens Advice, Community Money Advice, Debt Justice, Fairer Finance, Financial Inclusion Centre, Institute of Money Advisers, Money Saving Expert, Money Advice Trust, National Trading Standards, Step Change, Surviving Economic Abuse, Victim Support, Yvonne Fovargue.

Which? is also concerned that some claimants could face two-tier justice if their claim relates to events predating the Consumer Duty, which came into force in July 2023. It is predicted that tens of thousands of submissions made in the next year could fall into this bracket, and these consumers could miss out on redress if a business has narrowly complied with a regulatory rule but fell short of the higher standards set out in the Duty.

JOINT STATEMENT ON CHANGES TO THE FINANCIAL OMBUDSMAN SERVICE  

FINANCIAL SERVICES AND MARKETS BILL [HL] 2026  

House of Commons Second Reading  

As a coalition of consumer groups and debt charities, we strongly warn that some proposed legislative changes to the Financial Ombudsman Service (FOS) risk unfairly restricting and delaying consumers' access to timely, independent and impartial redress when things go wrong in the financial sector. 

When the cost-of-living crisis has already pushed household budgets to breaking point, the government must not undermine the vital safety net that underpins consumer trust in the entire financial system. 

The FOS is a vital safety net for consumers when something goes wrong. It offers a free, informal service to help them resolve disputes they have with a financial service provider like a bank or insurer. 

The Bill introduces a vastly more complex system for how the FOS determines complaints (Clause 7). The shift from a level-playing field with an impartial fairness test to one that initially presumes the firm was in the right means that consumers could now face a harder uphill battle to receive redress, and could even be denied the redress they would have received under the old test.  

The Bill also implements a formal referral mechanism between the FOS and the FCA for ambiguous FCA rules (Clause 6). In practice, this mechanism will strip the FOS of its decision-making discretion and hand it to the FCA, which is not designed to handle individual disputes. These changes will lead to significant delays and extra stress for consumers. The FCA has even stated these changes would ‘gum up the system’ and threaten the independence of the FOS, and called for changes to the Bill.

At a time when the cost-of-living crisis is pushing household budgets to breaking point, the Government should not be altering the fairness test and introducing new bureaucratic hurdles in the very system that provides redress for financial losses. 

With new leadership in No10 and an increased focus on ensuring consumers get the best outcomes in essential markets, we're asking for the Government to rethink its approach on this vital matter.