Adam Bernstein explains how new powers for the Financial Ombudsman Service could provide an opportunity for your business to take financial institutions to task.

Hacked off with the bank over charges? Angered by an insurer’s refusal to pay an insurance claim? What about a merchant acquirer levying new and unfair charges?

These are all matters for a well-established, but not necessarily that well known government body; the Financial Ombudsman Service (FOS). With new powers granted from 1 April 2019, the FOS could well be a firm’s route to fighting big financial institutions – at no cost. The FOS is a free service, set up by Parliament to deal with complaints against any financial organisation. Costs are borne by the financial services sector out of levies collected by the Financial Conduct Authority, and case fees.

Primarily aimed at helping the individual, the FOS has been able to help certain businesses and charities. However, from 1 April 2019, more firms came under its protection. Now assistance can be given to firms with £6.5 million turnover (was £1 million), that have less than 50 staff (was less than 10) and have a balance sheet of less than £5 million – previously less than €2 million.

As the FOS points out, it can resolve complaints about most financial products and services, including debt collection and repayment, mortgages, pensions and investments, PPI insurance, bank accounts, payments, cards, loans, and credit.

The process

Before the FOS can step in, a complainant has to give the institution an opportunity to investigate and, where appropriate, fix the problem. This means making contact, outlining in simple terms what the issue is, and what is required to make amends.

The institution then has eight weeks to respond with an offer to fix or, alternatively, a ‘deadlock’ letter where it denies the claim. From that point on the FOS can intervene.

However, and this is important, there are strict time limits placed on FOS investigations. In essence, it cannot examine matters that happened more than six years prior to the claim or more than three years from when the matter first arose. Further, the FOS cannot investigate matters where the complaint is made more than six months after the deadlock letter has been issued.

The online process guides a complainant when making contact, but it’s expected that information supplied includes an overview of the problem, details of the institution at fault, supporting evidence, and what is needed to deal with the matter.

The FOS reckons that 90% of complaints are dealt with by its first level investigators. However, hearings can be held if the investigator cannot decide the case and more information is needed. Alternatively, either side can request a hearing, explaining the points that they would like to make when making the request. During the hearing, the Ombudsman summarises the case, lets each side make its case, asks questions, and allows each side to ask questions of the other. Legal representation is not encouraged.

Where the decision goes against the complainant, it’s possible to appeal to the ombudsman itself. Beyond that, if the decision is held in favour of the institution, it’s still possible move the matter to the courts. But, if the decision is accepted, there is no further recourse. Either way, the decision is binding.

The FOS is designed to be simple to use and informal. There is no need to hire representation. That said, if the matter is complex or large sums are involved, it may be worthwhile seeking legal advice to see if a court is a better option. The FOS cannot take on the case if the matter has already been through the courts.


When investigating, the FOS will make contact with the institution, seeking their side of the story. If the decision goes in the complainant’s favour, the FOS can require the institution to either apologise, pay an award to cover loss, refund fees and charges, or pay compensation.

However, from 1 April, the FOS gained new powers to help more businesses, so limits on compensation rose. Complaints made before 1 April were limited to £150,000. But complaints relating to periods before 1 April but referred to the FOS after 1 April are limited to £160,000. 

However, complaints relating to periods after 1 April have an upper limit of £350,000. Beyond those limits, the FOS can only recommend that the institutions pay more. On top of those limits – which only relate to compensation – are costs and interest.

While fighting a large financial institution puts a complainant in a David and Goliath situation, the FOS can level the playing field. There are time limits and a process to follow, but anyone or business with a decent case should actively pursue their rights