The number of complaints handled by the UK’s Financial Ombudsman Service (FOS) has fallen to its lowest level in over a year, following a recent policy shift that introduced case fees for claims management companies (CMCs) and no-win, no-fee law firms.
According to figures released by the FOS on Thursday, it processed 68,000 complaints in the three months ending June 2025, down from 74,600 during the same period last year. The decline is largely attributed to a sharp reduction in complaints filed by professional representatives, which dropped from 36,600 to 30,800 year-on-year.
New Charging Structure Alters Complaint Landscape
In April 2025, the FOS began charging £250 per case submitted by professional representatives after the first ten cases in a year. If the complaint is upheld, the fee drops to £75. Previously, the FOS only charged financial services firms that were the subject of complaints. This change aims to discourage excessive or low-quality claims, a pattern observed with some CMCs accused of adopting a “scattergun” approach to filings.
The ombudsman hailed the development as an early indicator that the fee policy is leading representatives to be more selective and evidence-based in the complaints they choose to bring forward. It also expects fewer withdrawn or abandoned cases in the future as a result of this shift.
However, critics warn the move could have unintended consequences. Simon Evans, Chief Executive of the Consumer Redress Association, voiced concerns about a potential decline in consumer access to justice.
“I have long been worried about a reduction in access to justice for UK consumers as a result of this case fee, and this seems to be already being borne out,” he said.
Car Finance Complaints: A Mixed Picture
While overall complaints declined, the FOS reported a significant volume of car finance-related cases, processing 24,300 complaints linked to hire purchase agreements between April and June. This figure marks a rise from 15,900 cases in the same quarter last year but is notably down from 37,200 cases in the preceding quarter.
The decline coincides with a recent Supreme Court judgment that reversed a lower court ruling, thereby narrowing the scope of who can claim compensation in the ongoing car finance mis-selling scandal. This, coupled with a new redress plan announced by the Financial Conduct Authority (FCA), may further reduce the number of new complaints.
The FCA’s proposed scheme aims to provide a more cost-effective route for consumers, eliminating the need for intermediary services that typically charge up to 30% of any compensation awarded. To ease the pressure on the ombudsman system, the FCA has also extended the deadline for motor finance companies to respond to customer complaints until December 4.
Future Trends and Outlook
The FOS noted that some of the complaints processed during the last quarter were submitted prior to the introduction of the new fee regime and, therefore, were not subject to the charges. This suggests that further declines in complaint volumes could be observed in the coming quarters.
Matthew Maxwell Scott, Executive Director of the Association of Consumer Support Organisations, commented:
“This drop in numbers was always likely given the new fee regime, but we’ll have to see how big a decline there is over the next few quarters.”
While the FOS continues to adapt its structure to better manage resources and reduce frivolous claims, stakeholders remain divided over whether the new approach strikes the right balance between efficiency and consumer access to justice.
