Consultation on FOS fee reform

The FOS is consulting on two main fee differentiation models:

• By stage (FOS’s preferred option): This would be using the casework process which could be adapted to include new processes. This approach would reflect the effort and therefore the costs associated with bringing a complaint to resolution. Complaints resolved earlier in the process would attract a lower fee (for example, the FOS proposes a lower fee would be applied to cases resolved as part of the proactive settlement scheme). However, the FOS suggests this would be “revenue-neutral” for the FOS and so whilst some complaints would attract a lower case fee, others would attract a higher fee.   
• By outcome: The FOS has introduced differentiated case fees based on outcome with the introduction of charging representatives. This could therefore be expanded to also cover cases not brought by a professional representative. With this option, higher case fees would be payable by the respondent business when FOS find in favour of the complainant, and a lower fee would be payable when FOS find in favour of the respondent business. Again, FOS would intend this to be “revenue-neutral” so, as above, whilst some complaints would attract a lower case fee, others would attract a higher fee. 

A third hybrid option combining both approaches is also referenced. FOS says this option would go further towards achieving the funding principles and the “polluter pays” model but would be more complex to implement.

FOS sets out a number of existing measures to ensure that there is no bias (consciously or subconsciously) for a case handler to find for a consumer to generate a higher income for the service. 

FOS acknowledges that it needs to modernise some of its current billing processes and technology. It is considering: 

• Moving from the current 3 free cases to a monetary allowance system for complaints.  In the current structure, the value of free cases to a respondent business can differ depending on whether they are brought by a professional representative or not. For fairness and simplicity, FOS also propose to move to a monetary allowance for professional representatives. 
• Expanding quarterly billing in advance to all firms and professional representatives who are forecast to resolve 25 or more cases or more in a financial year (quarterly billing in advance is currently limited to only 8 firms). As part of this billing change, FOS proposes to reduce the time period in which firms could challenge invoices from 12 to 6 months. 

• Consultation closes: 8 October 2025
• Next steps: Feedback will inform the 2026/27 Plans and Budget consultation.
• Potential implementation: From April 2027.