Financial Ombudsman outlines next phase of service reforms

The Financial Ombudsman Service (FOS) has confirmed changes to its operations, following a joint consultation with the Financial Conduct Authority (FCA), it announced on 11 August 2026¹. The measures form the next phase of its programme to modernise the complaints process, and include new dismissal powers, a rule amendment on decision standards, a registration stage and joint thematic reviews with the FCA¹.

The new powers to dismiss complaints take effect on 1 October 2026¹. FOS says these cover complaints that are not appropriate for it and may be better resolved elsewhere, or are already being investigated in other ways. It lists complaints that may be better suited to court, law enforcement or another dispute resolution process, or where there has been no financial loss, or material distress or inconvenience¹.

A separate amendment to rules is intended to give greater clarity that FOS decisions are based on the standards applicable at the time of the act or omission complained about, and will not be applied retrospectively¹. FOS describes this as a foundation for proposed legislative changes to the "fair and reasonable" remit currently progressing through Parliament¹.

A new registration stage will be rolled out next year, following a consultation on differential case fees later this year¹. Its stated purpose is to ensure complaints referred to the service are within scope and ready to be investigated before being allocated to a caseworker, and FOS links it to work on a funding model that better reflects costs and supports earlier resolution of disputes¹.

FOS also says it will publish the first of its joint thematic reviews with the FCA later this year, to give more insight into the types of complaints it sees and its approach to resolving them¹. It says this will help inform firms' own complaints handling, prevent similar cases being escalated to it, and demonstrate how outcomes align with regulators' rules¹.

The announcement sits alongside earlier steps FOS lists as part of the same programme: an updated memorandum of understanding with the FCA, charges for professional representatives to refer cases, and changes to the interest rate applied to some awards to better reflect present economic conditions¹. It also cites digital changes already delivered, including online portals for businesses and consumers and an enhanced online complaint form¹. Legislative changes to the way the redress system and FOS operate are progressing through Parliament in the Financial Services and Markets Bill¹.

Why it matters for households

The dismissal powers are the part with a direct effect on consumers: from 1 October 2026, FOS will be able to turn away complaints it considers better suited to court, law enforcement or another dispute resolution process, or where it finds no financial loss, material distress or inconvenience¹. Anyone whose complaint falls into those categories would not get a FOS decision on it.

The rule amendment concerns timing rather than eligibility. FOS says decisions rest on the standards in force when the act or omission complained about happened, and are not applied retrospectively¹. For complaints about older events, that fixes the benchmark as the rules of the period rather than current ones.

The registration stage, due next year, changes when a complaint is allocated to a caseworker: cases would first be checked as within scope and ready to investigate¹. The consultation on differential case fees, expected later this year, concerns how firms fund the service rather than what consumers pay to complain¹. FOS has not reported the fee levels or the date the registration stage begins.

What happens next

• Consultation on differential case fees: later this year¹.
• First joint thematic review with the FCA: later this year¹.
• New dismissal powers: in effect from 1 October 2026¹.
• Registration stage: rolled out next year¹.
• Legislative changes: progressing through Parliament in the Financial Services and Markets Bill¹.

For how the service handles complaints, see what the Financial Ombudsman Service does and who can use it and taking a complaint to the Financial Ombudsman Service. Time limits are set out in Financial Ombudsman time limits, and award limits in how much compensation the Financial Ombudsman can award.