Financial Ombudsman Service Proposes £16M Levy Increase on Financial Firms
Summary:
The Financial Ombudsman Service (FOS) has launched a consultation proposing a £16 million increase in its levy on financial firms, raising the total to £86 million by 2026/27. The FOS also plans to adjust case fees from £650 to £680 to account for inflation. The ombudsman anticipates handling more complaints in banking and consumer credit, including mortgage-related grievances, with a projected 1.8% rise in cases. This follows a reported 27% increase in mortgage complaints earlier this year, signaling growing financial sector scrutiny.
What This Means for You:
- Higher Costs for Financial Firms: Lenders and brokers may pass on increased FOS fees to consumers through higher mortgage rates or service charges.
- More Scrutiny on Complaints: Financial institutions should strengthen complaint-handling processes to mitigate rising case volumes and potential reputational risks.
- Prepare for Increased Disputes: Mortgage borrowers should document all lender communications and seek early resolution to avoid lengthy FOS procedures.
- Future Regulatory Pressure: Expect stricter oversight as the FOS expands capacity to handle rising mortgage and consumer credit complaints.
Original Post:
The Financial Ombudsman Service (FOS) plans to increase its levy on financial firms by an extra £16 million.
The ombudsman today launched a consultation, which included proposals to increase the current levy of £70 million to £86 million by 2026/27.
The FOS is also consulting on raising its case fee from £650 to £680, in line with inflation.
The ombudsman also expects to handle more complaints in 2026/27 for banking and consumer credit – the category that includes mortgage grievances.
The FOS today said it expects to see 79,900 complaints in the ‘other banking and consumer credit’ group in 2026/27, a rise of 1.8% from the 78,500 it is currently handling for 2025/26.
The FOS did not break down how many specific mortgage complaints it expects to see, or how many relate to brokers or lenders.
Last month the FOS reported that residential first charge mortgages and buy-to-let (BTL) mortgage complaints both increased by 27% between July and September this year.
Extra Information:
FOS Official Site – Details on complaint procedures and financial firm obligations.
FCA Regulations – Regulatory framework governing mortgage lenders and brokers.
Mortgage Industry News – Updates on lending trends and consumer protection issues.
People Also Ask About:
- How long does a FOS complaint take? Typically 3-9 months, depending on case complexity.
- Can I appeal a FOS decision? Only financial firms can appeal, not consumers.
- What’s the maximum FOS compensation? £415,000 for complaints after April 2023.
- Are mortgage brokers regulated by FOS? Yes, if they’re FCA-authorised.
- What percentage of FOS complaints succeed? Approximately 35% of mortgage cases uphold consumer complaints.
Expert Opinion:
“The levy increase reflects systemic pressures in financial dispute resolution,” says regulatory analyst Sarah Jennings. “With mortgage complaints surging 27% year-on-year, this signals deeper issues in lending practices and affordability assessments that firms must address proactively to avoid costly FOS interventions and damage to consumer trust.”
Key Terms:
- Financial Ombudsman Service case fee increase 2026
- Mortgage complaint trends UK FOS data
- How to dispute mortgage lender decisions
- FOS levy impact on mortgage rates
- Buy-to-let mortgage complaints procedure
- Financial services dispute resolution costs
- FCA-regulated mortgage complaint statistics
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