The Financial Ombudsman Service: what it does and who can use it

The Financial Ombudsman Service is the free, independent body that settles disputes between consumers and financial firms in the UK. It describes itself as "a free, informal alternative to the courts with a duty to resolve financial complaints based on what we think is fair and reasonable"¹. Every year well over one million people contact the service². If a bank, insurer, lender, credit firm or investment company has treated you unfairly and its own complaints process has not put things right, the ombudsman can look at what happened and, if it agrees with you, tell the firm what it must do.

The service covers the financial products people use every day. It handles complaints about banking and payment services, including current accounts, savings accounts, direct debits, money transfers, electronic payment platforms, cheques and banker's drafts, and issues such as account closures, disputed transactions, IT failures and problems with switching services³. It also covers consumer credit, including payday loans, the affordability of lending, the quality of goods bought or hired on credit, and mortgages⁴, plus investments⁵ and insurance, including cases where an insurer says a policy was mis-sold or that something was not disclosed⁶. It can also look at how a bank dealt with a scam involving unauthorised payments, stolen details or identity theft⁷.

The scale of the service gives a sense of how widely it is used. Between April and June 2026 it received 8,900 new complaints about current accounts alone, and car and motorcycle insurance complaints rose to 4,100 in the first quarter of 2026/27, up from 2,800 in the same period in 2025⁸.

What the Financial Ombudsman Service does

The ombudsman exists to resolve complaints when a consumer and a financial business cannot agree. Its starting point is always that you must first complain to the business itself. The ombudsman can help if you have made a complaint to the financial business and you are not happy with its answer, or if it has not answered at all within the time allowed⁹. It does not act as a general regulator or a source of advice: it looks at a specific dispute, weighs the evidence from both sides, and says what it thinks is fair.

The range of complaints it can consider is broad. Beyond banking, credit, insurance and investments, it covers areas such as complaints involving gambling-related harm¹², how a debt collection business pursues repayment¹³, and the way a bank reduced its in-person services, including access to cash withdrawals and services only available face to face in a branch¹⁴. Where a complaint falls outside its scope, the ombudsman can provide details of the service that might be able to help, such as other ombudsman schemes covering energy and housing¹⁵.

Two boundaries matter in practice. First, the ombudsman only covers firms within its jurisdiction. If you deal with a firm that is not authorised by the Financial Conduct Authority (FCA), or that does not have permission for the activities you need, you will not have access to the ombudsman at all¹⁶. Before dealing with a firm, you can check it using the FCA's firm checker³. Second, the ombudsman decides what is fair in the round, not simply whether a firm broke a rule. A bank making a commercial decision to close a branch, for example, is not in itself unreasonable in the ombudsman's view; what it examines is whether the firm acted fairly, provided appropriate support and communication, and took account of customers' needs¹⁴.

The ombudsman is not the same thing as the Financial Services Compensation Scheme (FSCS), which pays out when a firm fails. The differences are explained in FSCS vs Financial Ombudsman Service, and the wider framework is set out in consumer protection in UK financial services.

Complain to the firm first: the eight-week rule

Before bringing a complaint to the ombudsman, you must make a formal complaint to the company involved. If it does not send you a final response letter within eight weeks, or you are unhappy with its response, you can bring the complaint to the ombudsman¹². The firm has to give you a final answer in 8 weeks or less⁹. This is the rule the whole process hangs on, and it is covered in more detail in the eight-week rule and in how to complain to a financial firm.

Some types of complaint work on shorter clocks. For complaints about regular payments, the firm must look into things and get back to you within 15 days, either with a response or to explain why it cannot yet give one, and it then has to send you a response within 35 days¹⁷.

There is one exception to waiting the full eight weeks. The ombudsman can look into a complaint before eight weeks have passed for the business to investigate it, but only if the business and its customer both agree¹⁸. In practice this is uncommon, and the usual route is to let the firm's process run its course first.

Once the firm sends its final response, the clock switches to you. You must contact the ombudsman within 6 months from getting the final response from the business¹⁰. If you miss that deadline, the ombudsman may not be able to look at your complaint, so the date on the final response letter matters. The full set of time limits, including the longer limits that apply to when the events themselves happened, is covered in Financial Ombudsman time limits.

Free to use: no claims firm or lawyer needed

The ombudsman is free for consumers¹⁸. Its own guidance repeats this across every product area: "Our service is free and easy to use"¹². Bringing a complaint to the ombudsman is straightforward and will not cost you anything¹⁹.

You also do not need anyone to represent you. The ombudsman states plainly: "You don't need to pay anyone to represent you, for example, a lawyer or claims management company (CMC)"¹⁰. Unlike a court, you generally do not need anyone to represent you at all, and if you prefer, the ombudsman can talk to a member of your family, a friend or someone else helping you¹. You do not need a lawyer or anyone else to represent you²⁰.

This matters because claims management companies charge for doing something you can do yourself for nothing. What they charge, and when paying one might make sense, is covered in claims management companies. The ombudsman's own process is designed for people to use directly: you answer a few questions online and the service will say whether it thinks it can help and what to do next to send your complaint²¹. An online complaint checker does the same job, telling you if the ombudsman can help and what to do next¹⁵.

If you are considering using AI to help complete the complaint form, the ombudsman asks you to read its guidelines on using AI before you start²². Its guidelines are: avoid entering personal information you would not want shared, such as health or banking information; only use AI to help you organise information or put it clearly; and check the resulting text carefully¹⁰. The service's wider position is that technology, including artificial intelligence, supports human judgement and does not replace it²³.

How the ombudsman decides what is fair

The ombudsman does not decide cases like a court decides law. Under the Financial Services and Markets Act 2000 (FSMA 2000), it must determine complaints "by reference to what is, in the opinion of the ombudsman, fair and reasonable in all the circumstances of the case"²⁴. The House of Commons Library summarises the same point: the ombudsman was set up by Parliament under FSMA 2000²⁵.

In practice, fairness is judged against what the rules said at the time. The ombudsman takes account of the relevant rules and guidance produced by the regulator, any relevant law, and industry good practice, together with the overall facts and circumstances of the complaint¹³. For complaints about mortgage arrears charges, for example, it uses the regulatory and legal standards that applied at the time of the event the consumer is complaining about²⁶. Its general approach to redress is that the customer should be put back in the position they would have been in if the problem had not happened²⁷.

That does not mean the ombudsman is rigid. It may adopt a different approach to a particular case to ensure it reaches a fair decision, and its approach may be updated in light of future cases²⁸. When it finishes investigating, it tells you whether it thinks the business treated you fairly or not, and explains how it reached its decision⁵. If it does not uphold your complaint, it tells you why and explains how the decision was reached²⁹.

The ombudsman is operationally independent of the regulator while following the rules in the FCA handbook¹, including the FCA's Dispute Resolution rules that govern how firms must handle complaints²⁷. So the FCA writes the rules firms must follow, and the ombudsman applies them, and its own sense of fairness, when the two of you cannot agree.

From investigator's view to final decision

A case at the ombudsman moves through two stages. When a complainant brings a complaint, one of the ombudsman's investigators looks into it first and shares an assessment with both sides. Most cases are resolved at this stage¹. The investigator's assessment is not the final word: it is a view, and you must accept or reject it by the deadline given³⁰.

If one or both sides disagree with the investigator's view, the complaint can be referred to an ombudsman, who takes a fresh look at it, including any new evidence¹. Historically, this happens in a minority of cases: in around 1 in 10 cases, either the firm or the consumer asks for a review and final decision by an ombudsman³¹. The numbers have grown over time, with 10,730 cases receiving a final ombudsman decision in 2009/2010, a 24% rise on the year before¹¹.

The ombudsman's decisions database holds all the final decisions it has published since 1 April 2013²⁶, so you can look up how similar complaints were decided before you refer your own. How long the process takes, and what to do while you wait, is covered in how long the Financial Ombudsman takes.

What the ombudsman can tell a firm to do

If the ombudsman thinks the business treated you unfairly, it tells the business to put you back where you would have been if the mistake had not been made, and it may also award compensation for any distress or inconvenience you suffered³. In scam and unauthorised payment cases, it may ask the firm to refund any payments you did not authorise, refund charges and interest the bank has applied, compensate you for any money you lost, and pay compensation for distress or inconvenience¹⁷. For an admin error or a delayed transfer into an ISA, it will tell the firm to compensate you for any financial loss, as well as for distress and inconvenience²⁹.

The ombudsman can also order specific refunds. If you were not told about a fee, it might tell the business it needs to refund the full amount of that fee³². In mortgage arrears cases, the complaints it handles include firms that applied unfair charges to an account, such as arrears fees, legal costs and field agent visit fees, firms that would not agree to a concession the customer asked for, like a temporary switch to interest-only or a term extension, and lenders unfairly trying to repossess a house²⁶.

There is one limit on its powers worth understanding. The ombudsman can recommend a business pay you more than its award limit if it thinks it fair, but the business does not have to accept that recommendation³³. Everything within the limit, once you accept a final decision, the firm must pay.

Award limit: up to £455,000, plus interest

The ombudsman's award limit is not a single figure. It depends on when you referred the complaint and when the events you are complaining about happened³³:

Interest can be awarded on top of the limit. If you were awarded interest for being deprived of money because the business delayed payment, that interest payment can be awarded on top of the limit³³.

How interest is calculated changed on 1 January 2026. Before that date, the ombudsman typically asked financial businesses to use a rate of interest at 8% simple a year. From 1 January 2026, it typically asks businesses to calculate interest using a time-weighted average of the Bank of England base rate plus one percentage point³³. The policy statement behind the change explains the mechanics: the time-weighted average takes into account the Bank of England base rate at the end of each day, interest is applied on a simple basis, and the new rate generally applies to the period from when the complainant was unreasonably deprived of the money to the payment deadline set by the ombudsman³⁴. The service intends to review the rate at least every two years, and caseworkers retain discretion to apply a different interest rate where that is suitable, proportionate and justifiable³⁴.

The payment deadline is usually 28 calendar days from the date the ombudsman informs the financial business that you have accepted the final decision³³. If the firm does not pay by then, the interest rate for late payment is usually 8% simple a year³³. The full detail on award limits is in how much compensation the Financial Ombudsman can award.

Once you accept a final decision: payment, tax and going to court

A final decision is only binding on the firm if you accept it. The ombudsman's policy statement is explicit: "Our final decisions are legally binding if accepted by the complainant"³⁴. If a consumer accepts the final decision, it is legally binding on the financial business, and the business cannot simply withdraw from the process¹. The House of Commons Library puts the same point the other way round: if the complainant accepts the final decision, it becomes legally binding for both parties²⁵.

Accepting is a real choice with real consequences. If you accept an award made in a final decision, it is unlikely you will be able to take the business to court for more compensation later³³. If you do not want to accept the decision, you can still go to court instead¹⁸, and the comparison between the two routes is set out in ombudsman or small claims court. But be aware that there are time limits on taking a case to court, and these continue to run while the ombudsman handles your case³³. What to do if you disagree with a decision is covered in disagreeing with an ombudsman decision.

Tax can come out of your compensation before you see it. In some cases the law requires the business to deduct income tax at the basic rate from any compensation it pays you, whether or not you are a taxpayer³³. If the ombudsman says a business needs to pay you interest on an award, the business should deduct income tax from it at the basic rate before paying it to you, pay that tax directly to HMRC, and give you a tax deduction certificate³³. If you are being compensated for investment or pensions loss, the business will not deduct capital gains tax for you³³, so any capital gains tax position is yours to sort out with HMRC.

One last practical point: although the ombudsman tells businesses how to calculate compensation, it will not usually check the calculations the business makes³³. If a payment looks wrong, query it with the firm first, and take it back to the ombudsman if it is not resolved.