Financial Ombudsman Service

Financial Ombudsman Service
Financial Ombudsman Service logo.jpg
FormationOperational: April 2000
Statutory footing: June 18, 2001 (2001-06-18)[1]
  • United Kingdom
Chief Ombudsman
Caroline Wayman

The Financial Ombudsman Service is an ombudsman in the United Kingdom. It was established in 2000, and given statutory powers in 2001 by the Financial Services and Markets Act 2000, to help settle disputes between consumers and UK-based businesses providing financial services, such as banks, building societies, insurance companies, investment firms, financial advisers and finance companies.[2][3][4]


The Financial Ombudsman Service can deal with complaints from consumers about most financial matters including, for example: banking, insurance, mortgages, pensions, savings and investments, credit cards and store cards, loans and credit, hire purchase and pawnbroking, financial advice, stocks, shares, unit trusts and bonds.

From November 2009 money-transfer operators also came under the ombudsman's remit.

Before the ombudsman can step in, the consumer must first give the business they are unhappy with the opportunity to look into the complaint itself - before the ombudsman service can make a decision on the dispute. The business has a maximum of 8 weeks to resolve the complaint. If they do not resolve it within 8 weeks or the consumer is not happy with the response then they can refer the complaint to the ombudsman service.[5]

The ombudsman has the authority to request or require a company to offer financial compensation, correct a consumer's credit file, or offer an apology, as a means of dispute resolution.[6]


The ombudsman makes decisions on the basis of what it believes is fair and reasonable in the particular circumstances of each case. In making decisions on individual complaints, the law [7][8] requires the ombudsman to take into account: relevant law and regulations; regulator's rules, guidance and standards; codes of practice; and (where appropriate) what he/she considers to have been good industry practice at the relevant time.[9]


The Financial Ombudsman Service is funded by the UK's financial services sector through a combination of statutory levies and case fees.[10][11] These are paid by financial businesses that are regulated by the Financial Conduct Authority (FCA) or licensed by the Office of Fair Trading (OFT) and are automatically covered by law by the ombudsman service. The payment of these statutory levies and fees is not optional and they are payable whether or not a complaint is upheld by the Financial Ombudsman Service. The service is free to consumers. Between 2006 and 2009 the ombudsman service made use of case-handling services provided by Deloitte LLP, to handle the growing volumes of work generated by payment protection insurance complaints.


The Financial Ombudsman Service publishes the proportion of complaints it upholds in favour of consumers. Across all complaints in 2013/2014 the ombudsman found 58% in favour of consumers.[12]

The ombudsman was set up by parliament to be an impartial and independent body, though its decisions can be criticised by the side that loses.[13][14][15] [16] [17][18]

Independent commentators acknowledge that the ombudsman service is a valuable free service for consumers - although those who feel they have "lost" a complaint might understandably feel let down and want to question the ombudsman's impartiality.[19][20] Some consumers have questioned the amount of redress awarded by the ombudsman [21] while many businesses expect the ombudsman to apply the compensation cap rigidly and lobbied against the increase (in January 2012) from £100,000 to £150,000 in the maximum compensation the ombudsman can tell a business to pay.[22]

Various websites have been set up to complain about the Financial Ombudsman's partiality - usually by people who disagree with particular ombudsman decisions.[23][24]

Complaints-handling performance of individual financial companies

Since September 2009 the Financial Ombudsman Service has been publishing complaints data on its website every six months about named individual businesses. The data provided relates to businesses which have 30 or more new cases, or 30 or more resolved cases, in each six-month period. The data shows the number of new complaints, and the proportion of complaints upheld in favour of consumers.

The complaints data shows that:[25]

  • just under 200 businesses (out of more than 100,000 covered by the ombudsman service) together generate around 90% of the complaints workload,
  • the number of complaints relating to each individual business ranges from 30 to over 45,000,
  • the proportion of cases upheld in favour of the consumer varies substantially from business to business – between 3% and 100%.

Budget and staffing levels

The entire ombudsman staff in 2007 (including substantial number of ancillary staff) was 960. They managed to handle 627,814 initial enquiries and close 111,673 cases which had been sent to for adjudication. The BBC reported in September 2007 that the ombudsman planned to reduce staff numbers to 600, reflecting the decline in mortgage endowment complaints.[26] By December 2009 ombudsman staff had increased to over 1,000 - reflecting a substantially increased workload of 200,000 cases. Currently there are 4,500 people working at the ombudsman – reflecting a substantially increased workload of over half a million cases last year (2014/2015).

Staffing levels at the Financial Ombudsman Service fluctuate - as does the budget year-on-year - to match the volume of disputes it is dealing with. The number of staff required - and forecasts for complaints volumes and workload - are consulted on publicly each year in the ombudsman's corporate plan and budget.[27][28]

Status of Ombudsman decisions

Around 90% of the disputes that the Financial Ombudsman Service resolves are settled at earlier informal stages, without the intervention of an ombudsman. An ombudsman's decision is the final stage of the Financial Ombudsman Service's process.[29] If the consumer with the complaint accepts a final decision, it is binding on both parties and enforceable in court.[30][31][32]

But if the consumer chooses not to accept an ombudsman's decision, their legal rights remain unaffected and they can take the matter to court instead – subject to any requirements set by the courts. However, independent commentators generally recommend that consumers should use the ombudsman service rather than the courts [33][34][35][36] as the outcome of court cases can be unexpected, disappointing and costly.[37]

However, there have been judicial reviews against the ombudsman, brought by financial services companies who have to accept the ombudsman's decisions which are binding in law. For example, in January 2011 the British Bankers Association – on behalf of a number of high-street banks – brought a judicial review against the ombudsman and the FSA on the approach to PPI complaints handling. The High Court rejected the banks' challenge and endorsed the approach taken by the ombudsman and the FSA.[38] The difficulty in winning a judicial review is that the Financial Services and Markets Act 2000 [39] which led to the establishment of the Financial Ombudsman Service requires the ombudsman to make decisions "by reference to what is, in the opinion of the ombudsman, fair and reasonable in all the circumstances of the case".[40]

In a judicial review of an ombudsman's decision brought by an independent financial adviser (IFA), the judge further clarified that the ombudsman is "free to make an award different from that which a court applying the law would make".[41] This means that a litigant has to surmount the very high hurdle of proving that the entirety of the ombudsman's decision was so unfair that no right minded person would have made a similar decision. This is referred to as the Wednesbury unreasonableness principle which applies to any application for judicial review under made due to the irrationality of the decision.


The board of the Financial Ombudsman Service[42] is appointed by the Financial Conduct Authority – and the appointment of the chairman is approved by HM Treasury. The board's role includes guarding the independence of the ombudsman - from undue influence by the financial services industry and trade bodies, regulators, consumer groups and government. Board members are non-executive - they have no involvement in individual complaints.

The ombudsman can be asked to appear before the Parliamentary Treasury Select Committee who can be contacted by the consumer's MP.

In November 2011 the Financial Ombudsman Service became covered by the Freedom of Information Act. The ombudsman's website has a page of information on this subject

Consumer satisfaction surveys - and surveys of businesses covered by the ombudsman - are conducted by the Financial Ombudsman Service on an ongoing basis. The results are published annually in the ombudsman's annual review.[43][44]

Customers of the Financial Ombudsman Service - both consumers and businesses - can seek redress from the Independent Assessor [45] if they are unhappy with the level of service they have received.[46]

The Independent Assessor is appointed by the board of the Financial Ombudsman Service. The current holder of the post is Amerdeep Somal, who has held several similar posts.[47]

The Independent Assessor reports formally to the board of the Financial Ombudsman Service - which publishes a report in full each year as part of the Financial Ombudsman Service's annual review.[48][49][50][51][52][53]

Triennial reviews

The non-executive board of the Financial Ombudsman Service commissions three-yearly external reviews of the service.[citation needed]

Chief ombudsmen


  • Employees have left overwhelmingly negative reviews on Glassdoor (with an average rating of 1.9 out of 5), blaming a decline in quality on recent changes in the way the organisation is structured.[54][55]
  • Timeliness - In the years since the ombudsman service was created, some consumers, businesses and commentators have suggested that the ombudsman takes too long to look at some complaints. In previous years, the ombudsman has seen complaints about some topical financial matters take longer to resolve than others (notably, mortgage endowments and payment protection insurance (PPI) due to the sheer volume of complaints received by the service.[56] The ombudsman’s published annual review (2012/2013) showed 58% of all disputes were sorted out within six months – and 43% of non-PPI cases within three months.[57]
  • Questions as to their impartiality[58] due to the manner in which they're funded by the financial services, and that many employees have worked for financial services firms, mostly as solicitors who make up 38% of their brethren.[59][60] Though the ombudsman service currently upholds over 49% of complaints in favour of the consumer, there have been complaints that the awards are inadequate.[61]
  • As an ombudsman's decision is the final stage in the service's process, consumers who remain unhappy would need to pursue their complaint through the court.[62] (However no alternative has been suggested.)
  • Lack of fifteen-year long-stop: There is no fifteen-year "long-stop" rule in the complaints-handling rules made under the Financial Services and Markets Act. In its policy statement published in January 2003 – and following subsequent reviews – the Financial Services Authority (FSA) set out why there is no fifteen-year limitation period in the complaints-handling rules, stating: "We do not consider it is in the interests of consumers to rule out the possibility of complaints being dealt with outside the 15-year period that would apply to court cases. Nor do we consider this necessary to prevent hardship to firms."
  • Dispatches shown on Channel 4 went under cover at the FOS and uncovered a number of issues. These included junior staff saying that they googled cases for answers, never told lenders to write off debts and general mishandling of cases. MPs called for a national inquiry into its work.[63]

International Network of Financial Services Ombudsman Schemes

The UK Financial Ombudsman Service is a member of the International Network of Financial Services Ombudsman Schemes, a global association whose members operate as out-of-court dispute resolution mechanisms in the financial sector.

Other members include:

A list of all members can be found at the International Network's website.

See also


  1. ^ Commencement order at
  2. ^ "BBC guide to making a financial complaint". BBC News. 8 January 2002. Retrieved 4 January 2010.
  3. ^ "Key facts about the Financial Ombudsman Service".
  4. ^ "Which? - online help for people making a complaint".
  5. ^ "MyFinances - complaining: how to get your way with financial services". Archived from the original on 7 August 2008. Retrieved 5 June 2008.
  6. ^ "Non-financial loss: compensation for trouble and upset". Financial Ombudsman Service. Retrieved 11 July 2018.
  7. ^ "Financial Services and Markets Act 2000 (UK)".
  8. ^ "FSA Handbook of Rules and Guidance, Dispute resolution - complaints (DISP)".
  9. ^ "Consumers haven't lost faith in the Financial Ombudsman Service". 7 June 2007. Archived from the original on 27 September 2011. Retrieved 5 December 2011.
  10. ^ "How is the Financial Ombudsman Service funded". Retrieved 5 December 2011.
  11. ^ "FSA Handbook of Rules and Guidance". Retrieved 5 December 2011.
  12. ^
  13. ^ Bourke, Lorna (9 March 2005). "Sunday Telegraph - We should stop throwing stones at the ombudsman". London: Retrieved 5 December 2011.
  14. ^ "Report to the European Parliament's EQUI inquiry by Lord Neill on behalf of the Equitable Members Action Group, a pressure group representing dissatisfied Equitable Life investors" (PDF). Retrieved 5 December 2011.
  15. ^ "MP questions in Parliament relating to the Financial Ombudsman Service". Retrieved 5 December 2011.
  16. ^ Simon Bain (29 May 2008). "Banking complaints justified". The Herald. Retrieved 5 December 2011.
  17. ^ Hosking, Patrick; Wighton, David. "The Times - Can you trust the Ombudsman?". London: Retrieved 5 December 2011.
  18. ^ Simon Bain (29 May 2008). "Banking complaints justified". The Herald. Retrieved 5 December 2011.[permanent dead link]
  19. ^ Which? - Financial Ombudsman Service is the unsung hero Archived 4 July 2008 at the Wayback Machine
  20. ^ Margaret Dibben (22 December 2007). "The Observer - A garland to the Financial Ombudsman Service". London: Guardian. Retrieved 5 December 2011.
  21. ^ "Evidence submitted to Lord Hunt's Review of the Financial Ombudsman Service". Retrieved 5 December 2011.
  22. ^ Richard Dyson (3 March 2008). "Mail on Sunday - Compensation rules wrecked my pension". Retrieved 5 December 2011.
  23. ^ "The Financial Ombudsman Service". Consumer Action Group. Retrieved 5 December 2011.
  24. ^ "FOS Problems website". Archived from the original on 20 March 2012. Retrieved 5 December 2011.
  25. ^ "Financial Ombudsman Service annual review 2012/13 - outcome of cases". Retrieved 2 September 2013.
  26. ^ "Financial Ombudsman to cut staff". BBC News. 21 September 2007. Retrieved 5 December 2011.
  27. ^ "Financial Ombudsman Service corporate plan & budget". Retrieved 5 December 2011.
  28. ^ "Ombudsman overrun with mis-selling complaints". London: The Guardian. 26 July 2004. Retrieved 5 December 2011.
  29. ^ "Financial Ombudsman Service - frequently-asked questions". Retrieved 5 December 2011.
  30. ^ Sascha Hutchinson (13 July 2006). "Resolving financial disputes". ThisIsMoney. Retrieved 5 December 2011.
  31. ^ Hosking, Patrick; Wighton, David (1 December 2011). "The Times - How to lodge an effective complaint". London: Retrieved 5 December 2011.
  32. ^ "Financial Ombudsman Service annual review 2012/13 - outcome of cases". Retrieved 2 September 2013.
  33. ^ "Daily Mail - Ombudsman quicker on bank charges". 12 July 2007. Retrieved 5 December 2011.
  34. ^ "Claims engulf courts". The Mirror. 13 June 2007. Retrieved 5 December 2011.
  35. ^ Which? - Hunt Review supports Which? call for ombudsman to remain free to consumers Archived 4 July 2008 at the Wayback Machine
  36. ^ "BBC - Banks backing down over charges". BBC News. 12 January 2007. Retrieved 5 December 2011.
  37. ^ "BBC - Lloyds wins second charges case". BBC News. 29 May 2007. Retrieved 5 December 2011.
  38. ^ Hosking, Patrick; Wighton, David (14 July 2010). "The Times - City fears all-powerful Ombudsman". London: Retrieved 5 December 2011.
  39. ^ "Financial Services and Markets Act 2000". Retrieved 5 December 2011.
  40. ^ Section 228 of the Act.
  41. ^ "Financial Ombudsman decisions - beyond challenge?". 22 July 2005. Retrieved 5 December 2011.
  42. ^ "Financial Ombudsman Service – board members". 18 October 2011. Retrieved 5 December 2011.
  43. ^ "Financial Ombudsman Service - how consumers rate the service". Retrieved 5 December 2011.
  44. ^ "Financial Ombudsman Service - how businesses rate the service". Retrieved 5 December 2011.
  45. ^ "The Independent Assessor and his terms of reference". 21 July 2011. Retrieved 5 December 2011.
  46. ^ "The Financial Ombudsman Service - service standards". 25 May 2011. Retrieved 5 December 2011.
  47. ^ "Appointment of new independent assessor". Retrieved 2 September 2013.
  48. ^ "The Independent Assessor's annual report 2002/03". 31 March 2003. Retrieved 5 December 2011.
  49. ^ "The Independent Assessor's annual report 2003/04". 31 March 2004. Retrieved 5 December 2011.
  50. ^ "The Independent Assessor's annual report 2004/05". 31 March 2005. Retrieved 5 December 2011.
  51. ^ "The Independent Assessor's annual report 2005/06". Retrieved 5 December 2011.
  52. ^ Michael Barnes. "The Independent Assessor's annual report 2006/07". Retrieved 5 December 2011.
  53. ^ Michael Barnes. "The Independent Assessor's annual report 2007/08". Retrieved 5 December 2011.
  54. ^ "10 of the worst companies to work for in the UK - according to their employees", The Telegraph, 4 July 2017 (retrieved 27 July 2017)
  55. ^ Reviews of FOS at Glassdoor
  56. ^ Hosking, Patrick; Wighton, David (27 May 2011). "Who said the customer is king?". London: Retrieved 5 December 2011.
  57. ^ "Annual review 2012/2013". Retrieved 2 September 2013.
  58. ^ "Executive Summary" (PDF). Retrieved 5 December 2011. I have been asked by the Equitable Members Action Group (‘EMAG’) to review the nature of the service provided by the Financial Ombudsman Service (‘FOS’) to Equitable Life Assurance Society (EL) complainant policyholders.
  59. ^ "Financial Ombudsman Service board". 18 October 2011. Retrieved 5 December 2011.
  60. ^ "Questions in the Houses of Parliament regarding the Financial Ombudsman Service". Retrieved 5 December 2011.
  61. ^ "Financial Ombudsman Service annual review 2009/10". Retrieved 5 December 2011.
  62. ^ "Consumer factsheet on ... how we deal with your case" (PDF). Retrieved 5 December 2011.
  63. ^

External links

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