Financial Ombudsman Service consults on changes to its case fees

The Financial Ombudsman Service is consulting on changing its case fee structure which would see businesses pay less for complaints which are resolved earlier in the investigation process. The service will remain free for consumers to refer a complaint, and for charities, families and friends who may be helping them.

Feedback from stakeholders from previous consultations has called for the Financial Ombudsman to differentiate its case fees for businesses. The proposals announced today aim to better reflect the effort and the cost the Ombudsman incurs investigating cases and could support the early resolution of complaints.

The Financial Ombudsman is a not-for-profit service, with financial firms currently paying a levy to contribute to its costs. Firms also pay a fixed fee of £650 for every case against them the service investigates, regardless of the stage at which the dispute is resolved. Since 1 April 2025, if the complaint is submitted by a professional representative and not upheld by the Ombudsman, this fee is reduced to £475. Most businesses receive three free cases a year.

The current model means all businesses pay the same, regardless of the stage the case reaches and how much work goes into resolving the dispute. Some businesses believe this is unfair when they are settling complaints earlier in the process.

The consultation announced today is seeking views on the proposal that businesses’ case fees are differentiated based on the stage at which a case is resolved. Complaints that are closed later in the process require more work and therefore cost more than those which are resolved earlier.

Jenny Simmonds, Interim Chief Executive at the Financial Ombudsman Service said:

“We are undertaking an ambitious transformation programme to reform our service and make it work for today’s economy.

“These proposals are seeking to modernise our charges for businesses, creating a fairer funding model that is fit for the future, and which better reflects our work, while ensuring our service remains free to consumers who bring their cases directly to us.”

To ensure it considers all options the Financial Ombudsman is also consulting on whether  case fees should be differentiated based on complaint outcome. Previous feedback from stakeholders has called for a stronger “polluter pays” model where those firms found to have done something wrong contribute more towards the service’s costs. This option would see firms pay less if the Ombudsman feels they have already resolved the dispute fairly themselves.

In 2024/25, seven in ten businesses whose customers referred complaints to the Ombudsman did not pay any case fees at all. For financial businesses that do pay case fees, the cost involved is likely to be much less than the legal costs of defending the case in court.

The Financial Ombudsman is also seeking views on a change to the free case allowance. The introduction of charging for professional representatives now means the value of free cases can differ. Changing the free case allowance to a monetary value would allow all respondent businesses and professional representatives to save the same amount of money.

Also included in the proposals is a move to change the Ombudsman’s payment mechanism to charge the majority of businesses and professional representatives quarterly and in advance. This would be based on a forecast of case volumes, with a mid-year check and end of year adjustment for accuracy. This would give the service the funds required to work cases while also ensuring businesses and representatives have a more predictable cash flow through the year.

The consultation comes alongside two other consultations being run by HM Treasury and by the Financial Conduct Authority and the Financial Ombudsman to look at ways to modernise the redress system.

All consultations will close on 8 October 2025.