The Financial Ombudsman Service has extended its scope and can now require financial services businesses to pay compensation of up to £350,000. It also covers more customers: still individuals but now small to medium size businesses as well as micro enterprises.

The Ombudsman is a more consumer-friendly forum to decide a complaint than Court and complaints can be made without any legal assistance. There is also no risk of having to pay the defendant’s costs if the claim does not succeed.

But, with the value of the compensation rising, the importance of issues being decided rises equally.

Involving legal advisers to present your complaint to the optimum may be money well spent, particularly if the value of your issue is at the higher end of the range.

We have often seen insurance claims that are not paid even where the sum involved is well above the previous FOS limit of £150k. The new limit is therefore very much welcomed in relation to claims such as high value thefts, catastrophic property damage and critical illness claims. The increased limit enables the Financial Ombudsman Service to deal far more effectively with these types of dispute.


A complaint can only be referred to FOS once the regulated business – whether bank, lender, insurer – has already considered the complaint. Only once the internal complaints process has completed can the customer refer the complaint to the Financial Ombudsman Service. The internal process should last no more than 8 weeks.

The Financial Ombudsman Service will then investigate the complaint and ask for information from both parties. A FOS Adjudicator will then decide what is fair and reasonable in the circumstances. They do not decide by reference to whether a financial services provider broke the law or were in breach of legal duties owed to their customer.

It is vital to marshal your evidence and present it as clearly as possible. If a critical piece of the story is missing the FOS Adjudicator may be unable to find in your favour. We can help you search for the right evidence and set it out in a way that the Financial Ombudsman Service can grasp quickly.

FOS is generally guided by the Regulations that apply to any particular business, usually one of the FCA’s Conduct of Business Sourcebooks. If any of these regulations are contravened that should be very helpful to your claim at FOS.

If there are also breaches of the legal duties owed this is also powerful information that FOS should know.

Appeal within the Financial Ombudsman Service

If the Adjudicator’s decision is not accepted by the parties then either can refer the matter upwards to an Ombudsman. We can also assist with this appeal process, advising on the initial Adjudicator’s decision and helping to address the weak points in any complaint made or errors in the Adjudicator’s decision.

Possible funding proposals

The amount of work required to present a complaint at FOS will vary depending on the type of complaint. It will also depend on the type of the evidence needed, for example, documents from the time the problem arose, a witness statement and even, in some cases, expert evidence. The extent of further enquiries and requests for information made by the Adjudicator in the investigation phase can also vary.

Fixed fee: We can consider the complaint and offer a fixed fee for the work, typically in phases: an initial advice on whether it is worth referring the matter; making the complaint to the Financial Ombudsman Service through to an initial Adjudicator decision; and then for an appeal to an Ombudsman if appropriate.

Contingent fee: We can also consider offering a contingency agreement whereby we do not charge if we do not succeed in recovering any compensation, but if you are awarded compensation following the complaint then we would become entitled to a percentage of that recovery. That percentage would need to be set at a level commensurate with the risk we take in funding your claim and the amount of time likely to be needed to deal with it. 

In either case you would have certainty about the costs and can consider whether the costs are worth the investment. On a contingency agreement you would only incur a liability to pay costs if the FOS award was in your favour.

About the author

Susan Hopcraft Partner

Susan advises on all aspects dispute resolution particularly in the financial services sector. She has extensive insurance, professional negligence and restrictive covenants experience. She deals with claims against solicitors, valuers, surveyors, brokers and accountants, fraud issues, recoveries for lenders and bank mis-selling.