The Financial Ombudsman Service (FOS)
When a customer has a problem with a financial business, the first step is usually to complain to that business.
However, the complaint may not always be resolved.
Therefore, customers need somewhere independent to turn.
This is where the Financial Ombudsman Service, usually shortened to FOS, becomes important.
In simple terms:
The FOS helps resolve eligible complaints between customers and financial businesses.
It is a free service for consumers. In addition, it can look at complaints involving areas such as banking, insurance, loans, mortgages and financial advice. (Financial Ombudsman)
What Does FOS Stand For?
FOS stands for:
Financial Ombudsman Service
Its main role is to resolve eligible disputes between customers and financial businesses.
For example, a complaint could involve:
- a bank
- a mortgage lender
- a mortgage broker
- an insurer
- an investment firm
- another financial business
Therefore, the FOS provides an independent route when a complaint cannot be resolved directly with the firm.
Is the FOS a Regulator?
No.
This is an important difference.
The FOS does not regulate firms in the same way as the FCA.
Instead, it looks at individual complaints.
Therefore:
FCA
Sets and enforces regulatory standards.
Meanwhile:
FOS
Looks at individual disputes between customers and financial businesses.
So, the FCA looks more broadly at the conduct of firms and markets, while the FOS focuses on specific complaints.
FOS Versus FSCS
The FOS can also be confused with the Financial Services Compensation Scheme, or FSCS.
However, their roles are very different.
FOS
Helps resolve eligible complaints against financial businesses.
FSCS
May compensate eligible customers when a covered financial firm cannot meet claims against it.
Therefore, a useful memory aid is:
FOS → Complaint
FSCS → Firm failure
This is one of the most important distinctions to remember.
A Simple Example
Imagine James believes his mortgage adviser gave him poor advice.
The adviser firm is still operating.
First, James complains to the firm.
However, the firm rejects his complaint.
If James remains unhappy and the complaint is eligible, he may then be able to refer it to the Financial Ombudsman Service.
Therefore:
Customer has complaint
↓
Customer complains to firm
↓
Firm investigates
↓
Customer remains unhappy
↓
Complaint may go to FOS
This is the normal route.
The Firm Gets the First Chance to Resolve It
Usually, the customer should complain to the financial business before going to the FOS.
This gives the firm a chance to investigate and put things right.
For most complaints, a business generally has up to eight weeks to provide its final response. (FCA Handbook)
Therefore:
Complaint made
↓
Business investigates
↓
Final response
↓
Customer decides whether to accept it
If the customer remains unhappy, the FOS may become the next step.
What Is a Final Response?
A final response is the firm’s formal answer to the complaint.
For example, the firm may:
- accept the complaint
- partly accept the complaint
- reject the complaint
If it accepts the complaint, it may also offer a way to put things right.
However, if the customer disagrees with the outcome, the final response should explain their right to refer the complaint to the FOS where appropriate.
Therefore, the final response is an important stage in the complaints process.
How Long Does the Customer Have to Go to FOS?
In general, once the firm sends its final response, the customer normally has six months to refer the complaint to the Financial Ombudsman Service. (Financial Ombudsman)
Therefore, the customer should not ignore the final response for a long period.
For example:
Final response received
↓
Customer still unhappy
↓
Normally six months to refer complaint to FOS
However, special circumstances can sometimes affect the time limit.
So, if there is any doubt, the current rules should be checked.
There Is Also a Wider Complaint Time Limit
Another time limit applies to when the problem itself happened.
Normally, a customer needs to complain within:
Six years of the event
or, if later:
Three years from when they became aware, or reasonably should have become aware, that they had cause to complain. (Financial Ombudsman)
Therefore, the basic rule is often remembered as:
6 years or 3 years from awareness
However, exceptional circumstances can sometimes allow a complaint to be considered outside these limits.
A Simple Time-Limit Example
Imagine a customer receives unsuitable mortgage advice in 2024.
They realise the problem in 2025 and complain soon afterwards.
Because the complaint is within six years of the event, it is normally within the general time limit.
Now imagine the customer only discovers the problem many years later.
In that case, the three-year awareness rule may become important.
Therefore, both the date of the event and the date the customer became aware can matter.
Exceptional Circumstances
Sometimes, a customer misses a complaint deadline for reasons outside their control.
For example, serious illness or incapacity could potentially amount to exceptional circumstances.
In such situations, the FOS may be able to consider the complaint even though the normal time limit has passed. (Financial Ombudsman)
Therefore:
Time limits matter, but exceptional circumstances can sometimes be considered.
However, customers should still complain as soon as reasonably possible.
What Mortgage Complaints Can FOS Consider?
The FOS can consider many eligible complaints involving mortgages.
For example, these can include problems relating to:
- mortgage lending
- mortgage advice
- mortgage broking
- interest-only mortgages
- mortgage arrears
- charges
- administration
- lender decisions and treatment
Therefore, both lenders and mortgage advisers can become involved in FOS complaints. (Financial Ombudsman)
A Mortgage Advice Complaint
Imagine Hannah meets a mortgage adviser.
She explains that she expects to move again within two years.
However, the adviser recommends a mortgage with a large early repayment charge lasting five years.
Later, Hannah moves and has to pay a significant charge.
She believes the mortgage advice did not properly take her plans into account.
Therefore, she complains to the adviser firm.
If the complaint is not resolved, the FOS may be able to consider whether the advice was appropriate.
A Mortgage Arrears Complaint
Now imagine Michael falls behind with his mortgage payments.
He contacts his lender and explains that he is experiencing financial difficulty.
However, he believes the lender has treated him unfairly and applied charges incorrectly.
Therefore, he makes a complaint.
If the lender cannot resolve the matter, Michael may be able to refer it to the FOS.
The FOS can consider complaints involving mortgage arrears and charges, using the regulatory and legal standards that applied at the relevant time. (Financial Ombudsman)
How Does the FOS Decide What Is Fair?
The FOS does not simply ask:
Did the business follow one rule?
Instead, it considers the circumstances of the complaint.
For example, it may look at:
- the facts
- evidence from both sides
- relevant law
- regulatory rules
- industry codes
- good industry practice
- what is fair and reasonable
Therefore, the FOS looks at the whole situation.
This is important because real financial complaints can involve several different issues.
What Evidence Might Be Considered?
In a mortgage complaint, evidence could include:
- fact-find documents
- mortgage illustrations
- suitability or recommendation records
- emails
- letters
- telephone recordings
- application forms
- lender records
- bank statements
- complaint correspondence
Therefore, good record keeping is extremely important for mortgage advisers.
If a complaint appears years later, the adviser may need to show why a particular recommendation was made.
Why Adviser Records Matter
Imagine an adviser recommended a five-year fixed mortgage.
Years later, the customer complains.
The adviser remembers that the customer specifically wanted long-term payment certainty.
However, there is no written record of that discussion.
This could make it much harder to show why the recommendation was appropriate.
Therefore:
If important information affects the advice, record it clearly.
Good records can protect both the customer and the adviser.
What Can the FOS Do?
If the FOS decides that a customer has been treated unfairly, it can require the business to put things right.
Depending on the circumstances, this could include:
- paying compensation
- refunding charges
- paying interest
- correcting records
- taking another practical action
Therefore, the aim is generally to put the customer back into the position they would reasonably have been in if the problem had not occurred.
However, the exact remedy depends on the case.
FOS Award Limits
The Financial Ombudsman Service has limits on how much compensation it can require a business to pay.
These limits can change over time.
From 1 April 2026, the main compulsory award limit is:
£455,000
for complaints referred on or after 1 April 2026 about acts or omissions occurring on or after 1 April 2019. (Financial Ombudsman)
For acts or omissions before 1 April 2019, a different limit can apply.
Therefore, the correct limit depends on both:
- when the event happened
- when the complaint was referred
As a result, the current FOS rules should always be checked.
Can FOS Recommend More Than the Limit?
In some cases, the FOS may consider that fair compensation should be higher than its compulsory award limit.
However, the amount above the formal limit may be treated differently.
Therefore, the award limit is important because it defines how much the FOS can require the firm to pay under its formal powers.
For exam purposes, always use the current rules relevant to the syllabus.
Is the FOS Free?
Yes.
The FOS is a free service for consumers. (Financial Ombudsman)
Therefore, a customer does not need to pay the Ombudsman to have an eligible complaint considered.
This is important because it gives consumers access to an independent complaints process without needing to start court action.
Does the Customer Need a Solicitor?
Usually, a customer can bring a complaint to the FOS themselves.
Therefore, they do not normally need a solicitor or claims management company simply to use the service.
However, customers are free to seek help if they wish.
The important point is:
The FOS is designed to be accessible directly to customers.
Investigator and Ombudsman
A complaint does not always go immediately to an Ombudsman.
First, a case may be looked at by an investigator.
The investigator reviews the complaint and tries to reach a fair outcome.
If the customer or business disagrees with the investigator’s view, the case may then be referred to an Ombudsman for a formal decision.
Therefore, the basic process can look like this:
Complaint referred
↓
FOS investigates
↓
Initial view
↓
If unresolved
↓
Ombudsman decision
Is the Ombudsman’s Decision Binding?
If the customer accepts a final Ombudsman decision within the required time, the decision becomes binding on the financial business.
However, the customer does not have to accept it.
If they reject the decision, they may retain other legal options, depending on the circumstances.
Therefore, the customer has an important choice at the final stage.
FOS Versus Court
The Financial Ombudsman Service is not a court.
Instead, it provides an alternative way of resolving financial disputes.
This can be simpler and more accessible for customers.
However, courts and the FOS operate differently.
For example, the FOS decides cases based on what it considers fair and reasonable in the circumstances, taking relevant law and regulatory requirements into account.
Therefore, it should not simply be viewed as a smaller court.
A Simple Complaint Journey
Let’s put the process together.
Imagine a customer believes their mortgage adviser gave unsuitable advice.
Step 1
The customer complains to the adviser firm.
↓
Step 2
The firm investigates.
↓
Step 3
The firm provides its final response.
↓
Step 4
The customer remains unhappy.
↓
Step 5
The customer refers the complaint to FOS within the relevant time limit.
↓
Step 6
FOS considers the evidence.
↓
Step 7
An outcome is reached.
Therefore, the FOS normally becomes involved after the firm has had a chance to resolve the complaint.
What Should a Firm Do With a Complaint?
Financial firms should have proper complaint-handling procedures.
For example, they need to:
- identify complaints
- investigate them fairly
- respond within the relevant time limits
- explain their decision
- tell customers about FOS rights where required
- keep appropriate records
Therefore, complaints should not be treated as an inconvenience to be ignored.
Instead, they form part of regulated financial conduct.
Complaints Can Help a Firm Improve
Complaints are not only about solving one customer’s problem.
They can also reveal wider weaknesses.
For example, imagine several customers complain that mortgage fees were not explained clearly.
This may show a wider problem with:
- staff training
- documents
- sales processes
- communication
Therefore, firms should look for patterns in complaints.
As a result, complaints can help identify problems before they affect more customers.
Consumer Duty and Complaints
The FCA’s Consumer Duty places strong emphasis on firms delivering good outcomes for retail customers.
Therefore, complaint information can be useful when assessing whether customers are actually receiving those outcomes.
For example, repeated complaints about:
- poor support
- unclear information
- unsuitable products
- unreasonable barriers
could suggest that something needs to change.
As a result, complaint handling connects with wider FCA expectations.
FOS Does Not Automatically Side With the Customer
It is important not to assume that every complaint succeeds.
The FOS considers the evidence from both sides.
Therefore, it may decide that:
- the business acted fairly
- the customer should receive compensation
- part of the complaint should be upheld
- no further action is needed
So:
Independent does not mean automatically agreeing with the customer.
Instead, the FOS aims to reach a fair and reasonable outcome.
The Difference Between a Complaint and a Claim
These two words can sound similar.
However, they are not always the same.
A complaint means the customer is expressing dissatisfaction about a financial firm’s service, action or failure.
Meanwhile, a claim may involve asking for compensation or payment under a legal or financial right.
Therefore, a customer may complain without necessarily having an FSCS claim.
This helps explain why FOS and FSCS have different roles.
Remember the Four Main Organisations
By now, four names are appearing regularly.
FCA
Regulates conduct and markets.
PRA
Regulates the prudential safety of certain firms.
FOS
Helps resolve eligible complaints.
FSCS
Provides compensation in eligible cases when firms cannot meet claims.
Therefore, a simple memory aid is:
FCA → Rules
PRA → Safety
FOS → Complaints
FSCS → Compensation after failure
This is simplified, but very useful.
Why Does FOS Matter to Mortgage Advisers?
A mortgage adviser may deal with customers for many years.
Therefore, advice given today could later be reviewed during a complaint.
This makes several things especially important:
- accurate fact-finding
- clear explanations
- suitable recommendations
- good records
- fair treatment
- proper complaint handling
As a result, good mortgage advice is not only about finding a suitable product.
It is also about being able to show why the recommendation was suitable.
A Good Adviser Should Be Able to Explain the Decision
Imagine an adviser recommends a mortgage.
The customer later asks:
Why did you recommend this one?
A good adviser should be able to explain the reasoning.
For example:
Customer wanted predictable payments
↓
Customer expected to stay in the property
↓
Mortgage costs were compared
↓
Relevant risks and charges were explained
↓
Recommendation matched the customer’s needs
Therefore, good advice should have a clear path from the customer’s circumstances to the recommendation.
This also creates a much stronger record if a complaint later arises.
Key Terms to Remember
FOS
Financial Ombudsman Service.
Complaint
An expression of dissatisfaction about a financial business’s service, action or failure.
Final Response
The firm’s formal outcome after considering a complaint.
Six-Month Rule
The customer normally has six months from the firm’s final response to refer an eligible complaint to FOS.
Six-Year Rule
A complaint normally needs to be made within six years of the event.
Three-Year Awareness Rule
If later, the customer may normally have three years from when they became aware, or reasonably should have become aware, that they had cause to complain.
Award Limit
The maximum amount FOS can formally require a business to pay for a complaint, subject to the applicable rules.
Fair and Reasonable
The basis on which FOS considers the circumstances of a complaint, taking account of relevant law, regulation and other factors.
Quick Knowledge Check
Before moving on, let’s check the main points.
1. What does FOS stand for?
Financial Ombudsman Service.
2. What is the main role of the FOS?
To resolve eligible complaints between customers and financial businesses.
3. Does the FOS regulate financial firms?
No. The FCA carries out financial conduct regulation, while the FOS deals with individual complaints.
4. What is the basic difference between FOS and FSCS?
FOS deals with complaints, while FSCS may provide compensation when a covered firm cannot meet eligible claims.
5. How long does a firm normally have to respond to most complaints?
Up to eight weeks.
6. How long does a customer normally have after a final response to refer the complaint to FOS?
Six months.
7. What is the general wider complaint time limit?
Normally six years from the event, or three years from when the customer became aware or reasonably should have become aware that they had cause to complain.
8. Can FOS consider mortgage complaints?
Yes. It can consider eligible complaints involving mortgage lending, advice and broking.
9. Does the FOS automatically agree with the customer?
No. It considers the evidence and decides what is fair and reasonable.
10. Why are good adviser records important?
Because they can show what the customer said, what was considered and why a mortgage recommendation was made.
Quick Summary
To sum up, the Financial Ombudsman Service helps resolve eligible complaints between customers and financial businesses.
Normally, the process begins with the financial firm.
First:
Customer complains to firm
↓
Firm investigates
↓
Firm provides final response
↓
Customer remains unhappy
↓
Complaint may be referred to FOS
For most complaints, the firm normally has up to eight weeks to respond. Meanwhile, the customer generally has six months from the final response to refer the complaint to FOS. (FCA Handbook)
In addition, the wider time limit is normally:
Six years from the event
or, if later:
Three years from awareness of the cause for complaint. (Financial Ombudsman)
Most importantly, remember the difference between the main protection bodies:
FCA → Regulates
PRA → Prudential safety
FOS → Resolves complaints
FSCS → Compensates eligible claims when firms fail
For a mortgage adviser, the lesson is simple:
Give suitable advice, explain it clearly and keep good records.
If a complaint ever arises, those records can help show exactly how and why the advice was given.
Next Page
Why Financial Services Are Regulated