What significant changes to the operation of the FOS may lie ahead?
10 Jul 2025
2 min read
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The FOS was established to provide an alternative to costly and lengthy court proceedings for financial services institutions and consumers. However, during its existence it has faced criticism for being biased towards consumers and making decisions that go beyond its remit.
The Treasury announced a review of the FOS in March 2025, with a focus on cutting the burden of red tape on financial services firms. At TheCityUK Annual Conference at the end of June, Emma Reynolds, the City Minister, said the FOS will be overhauled to stop it acting like ‘a quasi-regulator’.
Whilst we should know more following the Mansion House speech on 15 July, the Treasury is reported to be preparing changes to the function and remit of the FOS that include:
An appeal mechanism
| The Treasury is understood to be considering a new mechanism that would allow financial services firms to appeal FOS decisions to the FCA. This aligns with a general industry view that the FOS should be more aligned with the FCA to give greater certainty to firms. As matters stand, FOS decisions are final and can only be challenged by way of judicial review. This rarely happens, as there are limited grounds for bringing a claim for judicial review and they can be costly. |
| Clearer alignment with FCA rules and guidance | Greater consultation between the FOS and the FCA to address any uncertainty in relation to rules and guidance. Financial services firms have stressed the need for greater alignment to stop the FOS from being able to operate as a ‘quasi-regulator’ |
| More certainty regarding mass redress events | Mass redress events are a recognised issue for the financial services sector. The FCA and the FOS put out a call for input for modernising the consumer redress system in November 2024, with a focus on the problems caused by mass redress events. |
| A form of long-stop for bringing a complaint | The Treasury is understood to be exploring the introduction of a time limit for complaints against financial advisers. This has long been something advisers have campaigned for, especially as there is concern that the FOS are applying today’s standards to actions or advice from the past. |
We will keep you updated regarding the contents of the Chancellor’s speech on 15 July 2025 and the implications of any changes to the operation of the FOS for financial services firms and consumers.
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This article was written by Matthew Pegler and Hannah Miller