TISA welcomes Financial Ombudsman Service reform but warns Treasury and FCA against constitutional risks of new referral mechanism
The Investing and Saving Alliance (TISA) has today welcomed reforms to the Financial Ombudsman Service (FOS) to improve consistency and fairness but has warned against the dangers of new constitutional or operational risks created by the proposed referral mechanism.
Whilst supporting the proposed FCA referral mechanism in practice, TISA warns that it risks giving the FCA powers to effectively “make law” through the back door – potentially setting binding precedents for firms outside the scope of the consultative procedural process.
Sophie Legrand-Green, Head of Policy at TISA, said:
“We support the aim of creating a fairer, more transparent redress system. However, it is imperative that interpretations given by the FCA within the proposed referral mechanism are transparent and subject to appropriate governance. If a position would bind firms or change expectations, it must be published openly, and there must be a full consultation. Without that, regulatory opinions risk becoming de facto law with no proper constitutional basis.”
TISA’s responses make three key recommendations:
- New FCA guidance must not become law without consultation: Any new interpretation of FCA rules that the FOS relies on should be formally consulted on to preserve constitutional propriety and avoid retrospective application.
- Ensure transparency and consistency: The FCA and FOS should publish interpretive decisions and decision-making frameworks to give firms and consumers confidence in fair, predictable outcomes.
- Protect long-term product consumers: Treasury’s proposed 10-year time limit for complaints could unfairly exclude savers and pension customers who may discover issues only decades later and should therefore be protected.
TISA also supports the introduction of decision-making frameworks and enhanced accountability across the FOS, drawing parallels with the Senior Managers and Certification Regime (SMCR) as a model for improving culture, clarity, and individual responsibility in complaints handling.
Sophie Legrand-Green added:
“The FOS reforms represent a chance to build confidence in the UK’s consumer redress system. But that confidence depends on clarity of process, consistency of decision-making, and constitutional discipline in how rules are interpreted and applied.
TISA stands ready to work with HM Treasury, the FCA, the FOS to support a transparent, consultative process that delivers fair outcomes and certainty for consumers and firms.”
ENDS
Notes to Editors:
- TISA’s full responses to HM Treasury’s Review of the Financial Ombudsman Service, the FCA/FOS Modernising the Redress System consultation, and the FOS Evolving the Funding Model consultation are available on request.
- HM Treasury’s consultation FS Sector Strategy: Review of the Financial Ombudsman Service can be found here; the FCA/FOS’s consultation CP25/22: Modernising the redress system can be found here; the FOS’s consultation Evolving the Funding Model can be found here.
- TISA is a not-for-profit membership organisation committed to improving the financial wellbeing of all UK consumers by working collectively with the financial services industry to deliver solutions and champion innovation, for the benefit of people, our industry, and the nation.
- TISA has approximately 270 member firms involved in the supply and distribution of savings and investment products and associated services. Members include the UK’s major investment managers, retail banks, online platforms, insurance companies, pension providers, distributors, building societies, wealth managers, third party administrators, FinTechs, financial consultants, financial advisers, industry infrastructure providers and stockbrokers.