TISA urges transparency in FCA’s proposed FOS reforms & complaints time limit

The Investing and Saving Alliance has submitted responses to consultations on reforms to the Financial Ombudsman Service, giving qualified support while warning of constitutional and practical concerns with the proposed changes.

TISA stated it welcomes attempts to improve consistency and fairness in the operation of the Financial Ombudsman Service. However, the organisation cautioned that a proposed referral mechanism, intended to clarify disputed points of regulation, could create risks by granting new law-making powers to the Financial Conduct Authority outside established consultation processes.

In its response, TISA highlighted that the referral mechanism, as currently proposed, could enable the FCA to set binding interpretations, impacting firms without providing them the right to proper consultation or input.

Sophie Legrand-Green, Head of Policy at TISA, noted the need for transparency and structured governance within the referral process. In a statement, she 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 submission to the consultations contains three primary recommendations. Firstly, it advised that any new FCA guidance used by the FOS in resolving complaints should be subject to formal consultation, to prevent regulatory decisions being made and enforced without constitutional propriety or public engagement. This, it said, would avoid any retrospective application that could catch firms unaware or unprepared.

Secondly, TISA called for greater transparency and consistency in how interpretive decisions are made and shared with the market. "The FCA and FOS should publish interpretive decisions and decision-making frameworks to give firms and consumers confidence in fair, predictable outcomes," the submission states.

Thirdly, the Alliance raised concerns over HM Treasury's proposed 10-year time limit for consumer complaints. TISA warned that this could disadvantage savers and pension customers, who may only discover issues with their financial products many years after opening them. It recommended additional protections for these consumers to ensure their right to redress is not unfairly limited.

TISA also set out its support for the introduction of structured decision-making frameworks and enhanced individual accountability measures to improve the operation of the FOS. The organisation pointed to the Senior Managers and Certification Regime as a possible model to foster better culture, clearer responsibility and greater clarity in complaints handling across the sector.

Further emphasising the link between trust and governance, 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."

TISA's responses were submitted in relation to three consultations: HM Treasury's review of the Financial Ombudsman Service, the joint FCA/FOS consultation on a modernised redress system, and the FOS's funding model consultation. The Alliance's membership comprises more than 270 firms involved in savings and investments across the UK, including banks, asset managers, pension providers, and financial advisers.

The consultations come as policymakers consider a series of changes to make financial services redress more consistent and reliable, following years of concern about unpredictability and perceived inconsistency in outcomes from the FOS.