On 13 August 2025, the Financial Ombudsman Service (FOS) published a consultation paper on changing its case fee structure.
Background
In December 2024, regulations made by HM Treasury gave the FOS the power to charge professional representatives a case fee. From 1 April 2025, following public consultation and consideration of feedback from stakeholders, the FOS implemented a charging regime for certain professional representatives who bring complaints to it. The FOS introduced differentiated case fees when it brought in case fees for professional representatives.
On 15 July 2025, HM Treasury issued a consultation setting out the findings and proposed reforms following the Economic Secretary’s Review of the FOS, which was announced in March in the government’s Regulation Action Plan. Among other things the government is proposing to reform the legislative framework within which the FOS operates, to prevent the FOS acting as a quasi-regulator and to provide greater regulatory coherence, with consistent standards of consumer protection set by the Financial Conduct Authority (FCA) and applied by the FOS in resolving complaints. On the same day the FOS issued a joint consultation with the FCA on modernising the redress system.
Consultation
The FOS believes that further differentiation of case fees could help ensure it encourages firms to adopt positive behaviour with consumers, follow its published guidance, and resolve complaints quickly and fairly. The consultation paper now published asks for feedback on two specific options for case fee differentiation. The FOS’ recommended option for differentiation of case fees is by case stage and it notes that over half the respondents to a previous discussion paper felt that charging case fees based on the stage a case reaches in the FOS’ process was a good idea. For completeness, the FOS is also consulting on differentiated case fees based on outcome, regardless of whether or not the case has been brought by a professional representative.
In addition, in the consultation paper the FOS sets out the changes it would like to make to elements of its billing process to help reduce the administrative burden on firms, simplify its internal processes, and better support the ease of implementation of further differentiation in cases fees. The key proposals are moving from free cases to a monetary allowance and expanding ‘billing quarterly in advance’ to a larger group of respondent businesses, including professional representatives.
Next steps
The FOS invite stakeholders to provide feedback on its proposals before the consultation window closes on 8 October 2025.
Should proposals to further differentiate case fees be taken forward, the next steps for the FOS would be to carry out further analysis on potential price points, based on feedback received, and to implement the proposed billing simplification changes. The proposed differentiated price points for 2027/28 would be set out in the FOS’ 2027/28 Plans and Budget consultation, which will be launched in November 2026.