Following a joint consultation with the Financial Conduct Authority (FCA), the changes include an updated memorandum of understanding to align its decisions with FCA rules, and charges for professional representatives to refer cases, ensuring costs are fair and cases are better evidenced.
The interest rate applied to some awards will be amended to better reflect current economic conditions.
The FOS will update its rules to ensure decisions are based on applicable standards at the time of the act or omission complained about, and not applied retrospectively.
The organisation said this would support the government’s work about the ‘fair and reasonable’ remit.
The complaints resolution service will also gain powers to dismiss complaints that are not suitable and may be better resolved in other ways. This could include complaints better suited to court, law enforcement, or another dispute resolution process, or where there has been no financial loss, or material distress or inconvenience. This change will come into effect on 1 October 2026.
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A new registration stage will also be introduced this year, following a consultation on differential case fees. This will aim to ensure complaints referred to the FOS are within its scope and ready for investigation. This will be part of its work to provide a fairer funding model to better reflect costs and support earlier dispute resolution.
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.”
