Report of the Independent Review of the FOS is published

On the 12 July 2018 the Financial Ombudsman Service (the FOS) published a report on an Independent Review carried out by Richard Lloyd (former Which? executive).

The review was undertaken following the broadcast of the Channel 4 Dispatches programme which set out a number of concerns about the handling of FOS complaints.


The FOS has received considerable press attention over the last 12 months. In March 2018, the Channel 4 programme Dispatches aired setting out a number of issues with the handling of complaints by the FOS and how it organises its employees. Following this an independent review was commissioned to investigate the issues raised and suggest areas where improvements could be made. Richard Lloyd's findings are grouped into four broad themes (1) service quality, (2) organisational issues, (3) finances and (4) governance.  

Key findings

  • Whilst the overall finding is that the FOS provides an effective and essential service for many people, there are a number of key areas the FOS needs to improve to maintain public confidence.
  • The report highlights the importance of the FOS identifying gaps in existing capability to deal with complex cases. Better use needs to be made of specialist knowledge to decide complex cases fairly and swiftly.
  • There is a specific focus on the need to develop training, policies and procedure guides to improve quality, learning, technological support and motivational team building.
  • There is a need for clearer communications to consumers explaining the implication of an ombudsman's decision, its final and binding nature and the right to make further representations.
  • The FOS needs to review its investment in information technology and ensure that investments and delivery are fit for purpose. This will include (1) developments for consumer facing technology to enable consumers to better handle their complaint and (2) increasing technical capability for data analysis.
  • Consideration should be given to whether the FOS and the Financial Conduct Authority (FCA) should consult on a new funding structure for the FOS to enable it to fund the need for resource and development.
  • The FCA should review the impact of CMC behaviour in relation to threats of litigation against the FOS and this should be taken into account when developing new rules of conduct for CMCs. Ideally this should take place before the FOS takes on the handling of CMC complaints.
  • The FOS board has been asked to lead the development of a new strategic plan taking into account the conclusions in the review. The FOS is required to report on its progress against the recommendations before the end of 2018.


It is clear the FOS has been under increasing pressure and this is only likely to grow as it is required to balance the demand for complaints to be dealt with quickly and efficiently against the need to ensure all the information is considered and decisions are fair and reasoned. The review highlights a number of key areas where the FOS needs to take action to retain public confidence and improve its services.

The FOS offers an important alternative to litigation. As the discussions continue about expanding the remit of the FOS (including APP fraud and access for SMEs), it will be important for consideration to be given to the FOS' ability to deal with the complexity and volume of cases to ensure that complaints are dealt with fairly between firms and consumers. It is expected that there will inevitably be a greater cost to firms as further resource is required.  

For further information please contact Richard Hayllar (Partner), Warren Clark (Partner) or Alanna Tregear (Associate).

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at July 2018. Specific advice should be sought for specific cases. For more information see our terms & conditions.


Date published

13 July 2018


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