What Is the Financial Ombudsman Service and When to Use It

If you have tried to resolve a problem with a financial firm and are not satisfied with the outcome, you are not at a dead end. The Financial Ombudsman Service (FOS) is a free, independent body set up by Parliament to settle disputes between consumers and financial businesses in the UK. It exists specifically for situations where the firm's own complaints process has not resolved things to your satisfaction. Here is what you need to know about how it works and when to use it.

What is the Financial Ombudsman Service?

The Financial Ombudsman Service is the UK's official dispute-resolution body for financial products and services. It was created by the Financial Services and Markets Act 2000 and covers a broad range of regulated financial activities, including loans, credit cards, insurance, mortgages, pensions, and investments. Its job is not to regulate firms or fine them. That is the role of the Financial Conduct Authority (FCA). Instead, the Ombudsman looks at individual complaints and decides, on a case-by-case basis, whether a firm has treated a customer fairly.

You can think of the FOS as an independent referee. Its decisions are binding on the firm (if you accept them), and the service is free for consumers. You do not need a solicitor, and you do not need to be a financial expert to make a complaint. The full process and service information is available at the Financial Ombudsman Service website.

What types of complaints can the FOS handle?

The Ombudsman can look into complaints about most regulated financial products, including personal loans, credit broking, credit cards, car finance, insurance, bank accounts, mortgages, and payday loans. It can also handle complaints about debt collection practices, the way a firm handled a financial difficulty situation, and the information a firm gave you before you signed an agreement.

For example, if a lender did not carry out reasonable affordability checks before approving your loan, or if a credit broker charged you fees without making it clear what they were for, these are the kinds of issues the FOS can examine. It is also the body to turn to if you feel a firm has not handled your complaint properly or has ignored key evidence. For a practical guide to raising a complaint before you reach the FOS stage, see our article on how to complain about a lender.

When should you go to the Financial Ombudsman?

You cannot go straight to the FOS. The service is designed to be a second stage, after you have given the firm a chance to put things right. The process works like this:

• Step 1: Complain directly to the financial firm. Most firms are required to have a formal complaints procedure, and they must respond within a set timeframe, typically eight weeks. If they cannot resolve your complaint within that period, or if they reject it, they must send you a final response letter.
• Step 2: If you are unhappy with the final response, or if eight weeks have passed without a resolution, you can take your complaint to the Financial Ombudsman Service. You generally have six months from the date on the firm's final response letter to do this.
• Step 3: The FOS investigates. It will ask both sides for information and evidence, and an investigator will look at the facts and reach a view on what is fair in the circumstances. The whole process can take several months depending on the complexity of the case.

If the Ombudsman decides in your favour, it can tell the firm to put things right. This might mean paying compensation, refunding fees and interest, correcting your credit file, or taking some other action to make sure you are not out of pocket because of the firm's mistake.

What the FOS can and cannot do

The Financial Ombudsman can order a firm to pay compensation up to a maximum of £430,000 for complaints referred after 1 April 2024 (the limit is reviewed annually). It can also tell a firm to take specific steps, such as correcting information on your credit file, refunding charges, or reissuing documents. Its decisions are based on what it considers fair and reasonable in the circumstances, taking into account the relevant rules, regulations, and industry codes of practice.

However, the FOS cannot impose fines, withdraw a firm's authorisation, or pursue criminal prosecutions. Those powers sit with the FCA's enforcement division. The Ombudsman also cannot investigate complaints that are more than six years old (or more than three years from when you became aware of the problem, if later). It cannot handle complaints about firms that are not regulated by the FCA, and it does not deal with complaints about the service you received from a comparison website or a non-financial business.

It is worth noting that the FOS does not act as a consumer champion in the way that, say, Citizens Advice does. It is an impartial adjudicator. It will not argue your case for you, but it will investigate both sides and reach an independent decision.

Is the Financial Ombudsman Service free?

Yes. The FOS is entirely free for consumers. There is no charge for submitting a complaint, no fee if you lose, and no deduction from any compensation you are awarded. The service is funded by a levy on the financial services industry, so the cost falls on regulated firms rather than on the people who use the service. You do not need legal representation, and the FOS will guide you through the process in plain language. You can find free, independent guidance on how to complain about financial products at MoneyHelper.

The bottom line

The Financial Ombudsman Service is an important safeguard for UK consumers. It gives you a free, independent route to challenge a financial firm when your direct complaint has not been resolved. You do not need to be an expert, and you do not need to pay for help. The key thing to remember is that you must go through the firm's own complaints process first and that there are time limits, so do not delay if you are unhappy with the outcome.

Mini Money is a credit broker, not a lender. We search a panel of regulated lenders to match you with loan options, and checking your eligibility through us uses a soft search that will not affect your credit score. If you have a complaint about our service, you can contact us directly, and if you are not satisfied with our response, the Financial Ombudsman Service is there for you as the next step. If you are struggling with debt or worried about your finances, free, independent help is available at moneyhelper.org.uk.