PIMFA has welcomed the direction of reforms proposed in HM Treasury’s review of the Financial Ombudsman Service (FOS).
However, it warned that further clarity is needed in areas where the Ombudsman must exercise judgement to maintain industry confidence.
The review aims to ensure FOS remains a fair, free, and accessible service for consumers while addressing longstanding industry concerns about consistency and alignment with FCA rules.
Simon Harrington, head of public affairs at PIMFA, said: “We welcome the government’s proposals to align FOS determinations more closely with FCA rules, which should give firms greater clarity and confidence. However, concerns remain over how effectively the proposals will work, as FOS can still exercise subjective judgement outside FCA parameters.”
PIMFA’s response calls for FOS to apply FCA rules rather than simply take them into account, and for greater transparency, with more use of oral hearings and subject-matter experts in complex cases.
The Investing and Saving Alliance (TISA) also backed reforms aimed at improving consistency and fairness but warned of constitutional risks from the proposed FCA referral mechanism.
It said the process could allow the FCA to “make law” through the back door if interpretations are not transparent and formally consulted on.
Sophie Legrand-Green, head of policy at TISA, added: “Interpretations given by the FCA must be transparent and subject to proper governance. Without that, regulatory opinions risk becoming de facto law.”
TISA also recommended protecting consumers with long-term products from the proposed 10-year complaint limit.
Graeme Lawrie, from consultancy Capco’s financial crime and regulation practice, described the reforms as “a positive step towards a more efficient and transparent redress framework”.
He added: “Improved FCA-FOS collaboration should give firms clarity and consumers faster outcomes, but the 10-year limit may disadvantage some long-term customers. Firms will need to invest in data and governance systems to identify and resolve issues early, ensuring trust in a changing regulatory landscape.”
