FOS confirms major overhaul of the complaints process – what firms need to know

The FOS will proceed with the proposed changes to its dismissal powers, with formal rule changes taking effect from 1 October 2026.  New grounds include 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 inconvenience.

All dismissal decisions will remain discretionary (with such discretion exercised in line with public law principles) and will be based on the individual circumstances of each case; the needs of vulnerable consumers and those that require reasonable adjustments will continue to remain important considerations; and safeguards, guidance and oversight will support consistent and proportionate decisions.  In 2024/25, the FOS resolved over 225,000 complaints and the total number dismissed was just over 1,000, illustrating that these powers are used sparingly.

The FOS will proceed with a new dismissal ground where the respondent has reviewed the subject matter of the complaint in accordance with established regulatory standards, with the aim of reducing unnecessary duplication and supporting greater consistency and finality.  However, this ground will not cover firm led redress exercises, and the FOS will not apply it where there are regulatory ambiguities or gaps that cannot first be transparently resolved by other means.

The FOS will proceed with the dismissal grounds relating to complaints previously considered or excluded under the FOS, including the addition of 'factual' new evidence as the threshold for reopening.  Finality should remain the starting point, but the FOS will continue to revisit cases where new factual evidence, not previously available to the complainant, is likely to affect the outcome, particularly relevant in fraud and scams cases.

The FOS will proceed with introducing a registration approach within its complaint-handling framework but will defer formal rule changes to align with its forthcoming consultation on case fees, to ensure a coherent overall framework where fees fairly reflect the effort required to resolve disputes.  A pilot will begin with fraud and scams casework in October 2026, with cases continuing to be accepted under current arrangements but with more activity, such as information requests and case management, taking place earlier in the overall casework process.

This change affects when information is provided, rather than what is required, it is not intended to prevent complaints from progressing or to introduce an additional evidential threshold.  At present, cases often progress without core information, meaning that where key information arrives late, complaints take over three weeks longer on average to reach a first assessment.

The FOS will amend DISP 3.6.4R to clarify that in considering what is fair and reasonable, the ombudsman will take into account only the law and regulations, regulators' rules, guidance and standards, codes of practice and (where appropriate) good industry practice, as were relevant at the time of the act or omission giving rise to the complaint.  The FOS has decided not to proceed with removing 'good industry practice' from DISP 3.6.4R at this stage and will instead await the outcome of the legislative process.

The FOS was persuaded that the concept of 'material' financial loss could indirectly discriminate on grounds of gender, ethnicity or disability, as what is material to one consumer may not be to another.  The compelling reason ground has therefore been amended so that dismissal on this basis will only be a consideration where the complainant has not suffered (or is unlikely to suffer) financial loss, material distress or material inconvenience, meaning there must be evidence of no loss or harm at all.

Respondents highlighted that a complainant's behaviour, ability to engage, or ability to evidence a complaint may reflect underlying factors such as financial hardship, health conditions, language barriers or experiences of domestic or economic abuse, and there was a clear expectation that these factors be taken into account.  The strongest mitigation across all grounds is the express retention of discretion, together with a requirement that before a complaint is dismissed, decision makers consider individual circumstances including potential vulnerabilities or protected characteristics.

Later in 2026, the FOS will publish the first of its joint thematic reviews with the FCA to provide more insight on the types of complaints seen and its approach to resolving them – helping to inform firms' own complaints handling, prevent similar cases from escalating, and demonstrate how outcomes align with regulators' rules.

‍