Government publishes reforms following its review of the Financial Ombudsman Service in March 2026

The government published a number of reforms in March 2026 following its review of the Financial Ombudsman Service, some of which are being taken forward through the Financial Services and Markets Bill, which was introduced in the House of Lords on 19 May 2026¹. The Ombudsman set out its own decisions on modernising its processes in a policy statement published in August 2026, following a consultation that ran between March and May 2026 and drew 92 responses from firms, trade bodies, consumer groups, professional representatives and individual consumers¹.

The Ombudsman will introduce a registration approach within its complaint handling framework, with formal rules to follow alignment with a separate consultation on case fees¹. Most responses, 75%, gave broad support for a registration stage, though the Ombudsman describes that support as conditional, particularly from consumer groups that felt able to offer only limited support¹. It will test the approach through pilots, beginning with fraud and scams casework in October 2026¹.

Changes to the Ombudsman's dismissal powers will take effect in formal rules from 1 October 2026, with a report after the first year of operation¹. The dismissal grounds are being refreshed following revocation of the Alternative Dispute Resolution (ADR) Regulations 2015 on 6 April 2026, and the government has confirmed it will remove the Financial Ombudsman from the scope of the Digital Markets, Competition and Consumers Act 2024¹. The Ombudsman will also amend DISP 3.6.4R of the FCA Handbook to clarify that decisions are based on the standards applicable at the time of the act or omission complained about; the rule change takes effect from 1 October 2026 but applies to all current and future complaints because it is clarificatory only¹. The reference to "good industry practice" will be retained at this stage and kept under review as the Bill progresses¹.

The Ombudsman says cases often reach investigation without the core information needed to assess their merits. Where key information arrives late, complaints take over three weeks longer on average to reach a first assessment, and in around 500 cases a year it asks parties for further information at least ten times before reaching an initial outcome¹. Over 20% of cases move back from investigation to earlier stages, and of the 225,000-plus cases resolved in 2024/25, over 10% were withdrawn or abandoned before receiving a first assessment¹. In 2024/25 the Ombudsman resolved over 225,000 complaints and dismissed just over 1,000¹. A YouGov survey cited in the policy statement found around a quarter of respondents said being asked to provide information earlier could make them less likely to pursue a complaint¹.

Why it matters for households

The Ombudsman resolves individual complaints between financial businesses and eligible complainants, and can also look at complaints from small and medium-sized enterprises about financial firms and from customers of claims management companies¹. The registration stage changes when information is provided rather than what is required, and the Ombudsman says it is not intended to prevent complaints progressing or to add an evidential threshold¹. Consumer groups and individual consumers raised concerns about the removal of "good industry practice" as a consideration in the fair and reasonable test, citing potential effects on fairness in individual cases or where vulnerabilities are present¹. Across the consultation, respondents stressed the need for clear guidance, transparent reasoning and monitoring, and said the combined effect of the reforms should be managed so that access to redress is maintained¹. The dismissal rule changes and the amended fair and reasonable test both take effect from 1 October 2026¹.

What happens next

The Ombudsman will run pilots beginning with fraud and scams casework in October 2026, and formal rules on dismissal and the fair and reasonable test take effect from 1 October 2026¹. Formal rules on registration will follow alignment with the case fees consultation¹. The Financial Services and Markets Bill was introduced in the House of Lords on 19 May 2026, and the Ombudsman will keep the position on "good industry practice" under review as the legislative process continues¹.