Consumer groups challenge proposed Financial Ombudsman reforms

A coalition of some of the UK’s most prominent consumer campaigners and charities have today issued a statement calling on the Government to rethink potentially devastating legislative changes to the Financial Ombudsman Service (FOS), warning the shake-up could lock consumers out of free, independent redress.

Which? and a coalition of 15 organisations including StepChange, Fairer Finance, Money Saving Expert, Citizens Advice and Age UK fear that proposed legislative changes to the FOS set out in the Financial Services and Markets Bill could ultimately prevent consumers accessing the redress they are entitled to, with potentially catastrophic results. The FCA has also warned against some of the changes, arguing that they would ‘gum up the system’.

The FOS offers an entirely free and impartial route for consumers to seek redress when they’ve been treated unfairly by a financial services company. When an individual is locked in a dispute with their bank or an insurer, it offers an absolutely vital safety net for individuals when something goes wrong.

Ultimately, if the FOS decides a business has treated a consumer unfairly, its decision is binding and can force the company to fix their mistake or offer compensation without an individual having to pursue time-consuming or costly alternatives like court action.

At a time when the cost-of-living crisis has already pushed household budgets to breaking point, access to a fair, free and impartial Ombudsman service is more essential than ever to stop consumers being ripped off.

In the statement, the coalition delivers a damning verdict on the proposed changes and calls on the Government to urgently rethink its plans.

Rocio Concha, Which? Director of Policy And Advocacy said “For millions of families walking a financial tightrope, the Financial Ombudsman is an essential lifeline that stands between them and big business when something goes wrong.

“When many households are already stretched to breaking point, introducing reforms that risk making it slower and more challenging for people to access redress sends a chilling message: that when powerful institutions make costly mistakes, ordinary people will be left to pick up the pieces.”