Banks ombudsman complaints slump after Treasury overhaul
Complaints to the banks ombudsman fell to the lowest level in two years in the last quarter of 2025 as changes from regulators and Treasury ease the caseload.
Between October and December the Financial Ombudsman Service (FOS) received 47,300 complaints – a major drop from the 68,400 lodged the year prior.
It also maintains a similar rate from the previous quarter where 46,300 new grievances were recorded as new reforms came into affect.
Under the new system, professional representatives face a £250 charge for each case referred to the FOS beyond the first ten cases per financial year.
The changes, which came into effect in April 2025, also dictate that banks will not be charged for the first three complaints they receive in the financial year. From the fourth complaint onward, a case fee of £650 applies.
Morning Wire revealed last year the banking industry’s ‘Big Six’ – Barclays, HSBC, Lloyds Banking Group, Natwest, Santander and Nationwide – paid the FOS a combined £38.8m in admin fees for the year ending March 31 2025.
Lloyds topped the list at £12.6m, with Barclays second at just short of £9m.
The FOS said the changes have led to “better evidenced complaints” from professional representatives with fewer withdrawn or abandoned. In the last financial year nearly a third of complaints were withdrawn or abandoned, compared to 19 per cent from April to December 2025.
“The changes we have already introduced – and those we plan to make in the future – will allow us to focus on getting back to our core purpose for customers as a quick, informal and high-quality dispute resolution system,” James Dipple-Johnstone, interim chief ombudsman at the FOS, said.
Motor finance pause eases FOS caseload
The pause on motor finance complaints by the Financial Conduct Authority (FCA) has also led to a major drop in cases with just 400 complaints in the three months to December 2025, compared with 14,400 in the same period the prior year.
Complaints relating to the car mis-selling scandal – which centres around the use of ‘secret’ agreements with banks and car brokers – led a spike of 305,726 cases to the FOS in the year ending March 31 2025, hitting heights not seen since the PPI scandal.
The FOS has been rocked by a leadership crisis in the last year following the abrupt departure of chief executive Abby Thomas in February.
A Treasury Committee report, published in July, revealed Thomas had been dismissed after a “mutual collapse in confidence” stemming from “fundamental disagreements” with the board over strategy.
Just days later, FOS chair Baroness Zahida Manzoor announced she would step down at the end of her term on 1 August.
Chancellor Rachel Reeves has laid out plans for “the most significant reform to the Financial Ombudsman Service since its inception.”
This followed accusations of the body becoming a “quasi-regulator” with new reforms indicating it must seek the FCA’s view for guidance on unclear matters.