FOS Redress Reforms: What the Expanded Powers to Dismiss Complaints Mean for Firms and Consumers

The changes, which were announced on 11 August 2026, follow consultation with the Financial Conduct Authority (“FCA”), are intended to reinforce the FOS's role as a quick and informal alternative to court proceedings, while improving consistency and predictability across the wider complaints landscape. 

From 1 October 2026, the FOS will introduce expanded grounds for dismissing complaints. These will include situations where a complaint may be more appropriately dealt with through the courts, law enforcement agencies or another dispute resolution process. Complaints may also be dismissed where there has been no financial loss or material distress and inconvenience suffered by complainants. The FOS has, however, amended aspects of its original proposals following consultation feedback, recognising that even relatively small financial losses may have a significant impact on some consumers. 

Alongside the new dismissal powers, the reforms seek to provide greater certainty regarding how complaints are assessed. The FOS has confirmed that decisions will continue to be based on the standards applicable at the time of the relevant act or omission, rather than applying standards retrospectively. This change is intended to provide a clearer framework for firms assessing potential liabilities and managing complaints. 

Notably, the FOS has rowed back from proposals to remove "good industry practice" as a factor when determining what is “fair and reasonable” (the test that it adopts when deciding complaints). Consumer groups and charities expressed concerns that removing this consideration could unduly restrict the Ombudsman's ability to reach fair outcomes in individual cases. As a result, the FOS will await the outcome of ongoing legislative developments before making any further changes in this area. 

Further reforms are planned. A new complaint registration stage is expected to be introduced from April 2027 at the earliest. The objective is to ensure that complaints fall within the FOS's jurisdiction and are sufficiently developed before being allocated to a caseworker. The timing will depend on forthcoming consultations regarding case fee arrangements. 

The reforms form part of a broader programme of change that includes closer coordination between the FOS and the FCA, the publication of joint thematic reviews, digital improvements to complaint-handling processes and changes designed to improve transparency and efficiency. According to the FOS, these measures should help firms identify emerging issues earlier, improve complaint resolution and reduce the escalation of avoidable disputes. 

Why this matters

The reforms may be welcomed by some financial services’ firms, particularly those concerned about growing complaint volumes, inconsistent outcomes on complaints decided by the FOS and uncertainty regarding the scope of the FOS's jurisdiction. Greater clarity around which complaints are suitable for Ombudsman determination may reduce the resource burden for firms associated with investigating and defending complaints that are ultimately better suited to alternative forums (particularly higher value or complex cases that may require live evidence).

For consumers, however, the changes may create a greater need to consider carefully whether the FOS is indeed the most appropriate route for resolving a dispute. While the Ombudsman remains a free and accessible alternative to Court litigation, some complainants may find that certain complex or non-financial disputes are better directed elsewhere.

More broadly, the reforms reflect an ongoing policy objective of creating a more predictable and coherent redress framework across the financial services sector. As legislative changes continue to progress through Parliament, firms should expect further developments in how complaints and customer redress are managed.

Key takeaways

• Expanded FOS dismissal powers will take effect from 1 October 2026.
• Complaints may be rejected where another forum, such as the courts or another dispute resolution process, is more appropriate.
• FOS decisions will continue to be assessed against the standards applicable at the time of the events complained of.
• The Ombudsman has deferred changes relating to the consideration of "good industry practice".
• A new complaint registration stage is planned from 2027, subject to further consultation.
• Financial services firms should review complaint-handling procedures and governance arrangements to ensure they are aligned with the evolving redress framework.

For regulated firms, the message is clear: proactive complaint management, robust record keeping and early identification of potential issues are likely to become even more important as the FOS seeks to focus its resources on complaints that fall squarely within its intended remit.