Bank Ombudsman Complaints Plunge to Two-Year Low Following Regulatory Overhaul
The Financial Ombudsman Service has witnessed a significant decline in complaints during the final quarter of 2025, reaching the lowest level recorded in two years. This notable reduction follows comprehensive reforms implemented by the Treasury and financial regulators, which have effectively eased the caseload pressure on the dispute resolution body.
Quarterly Complaint Figures Show Dramatic Decrease
Between October and December 2025, the Financial Ombudsman Service received 47,300 new complaints. This represents a substantial drop from the 68,400 grievances lodged during the same period the previous year. The current figure maintains a similar rate to the preceding quarter, where 46,300 new cases were recorded as the initial wave of reforms began to take effect.
The new system, which came into force in April 2025, introduces a structured fee arrangement for professional representatives and banking institutions. Professional representatives now face a £250 charge for each case referred to the FOS beyond the first ten cases per financial year. Concurrently, banks will not be charged for the first three complaints they receive annually, with a case fee of £650 applying from the fourth complaint onward.
Impact on Complaint Quality and Industry Costs
According to the FOS, these changes have resulted in better evidenced complaints from professional representatives, accompanied by a reduction in withdrawn or abandoned cases. In the last full financial year, nearly one third of all complaints were either withdrawn or abandoned. This figure decreased to 19 per cent for the period from April to December 2025, indicating improved case management and submission standards.
James Dipple-Johnstone, interim chief ombudsman at the FOS, commented on the developments, stating: "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."
The banking industry's financial contributions to the FOS remain substantial. City AM previously revealed that the 'Big Six' banks – Barclays, HSBC, Lloyds Banking Group, Natwest, Santander and Nationwide – paid a combined £38.8 million in administrative fees for the year ending March 31, 2025. Lloyds Banking Group topped this list with payments of £12.6 million, followed closely by Barclays at just under £9 million.
Motor Finance Pause Contributes to Caseload Reduction
A significant factor in the reduced complaint numbers has been the pause on motor finance complaints implemented by the Financial Conduct Authority. This regulatory intervention resulted in just 400 complaints in the three months to December 2025, compared with 14,400 during the same period the previous year.
The motor finance sector had previously generated an unprecedented surge in cases, with complaints relating to car mis-selling scandals reaching 305,726 in the year ending March 31, 2025. This volume represented the highest caseload since the peak of the PPI scandal, centering around allegations of 'secret' agreements between banks and car brokers.
Leadership Changes and Future Reform Plans
The FOS has experienced considerable leadership turbulence throughout the past year. Chief executive Abby Thomas departed abruptly in February, followed by chair Baroness Zahida Manzoor's announcement that she would step down at the end of her term on August 1. A Treasury Committee report published in July indicated that Thomas's dismissal resulted from a "mutual collapse in confidence" stemming from "fundamental disagreements" with the board over strategic direction.
Chancellor Rachel Reeves has outlined ambitious plans for what she describes as "the most significant reform to the Financial Ombudsman Service since its inception." These proposals follow criticisms that the body had evolved into a "quasi-regulator," with new reforms indicating that the FOS must now seek the Financial Conduct Authority's guidance on unclear regulatory matters.
The combined effect of regulatory changes, fee structures, and leadership transitions appears to be reshaping the complaint landscape for UK financial consumers, with early indicators suggesting more efficient dispute resolution processes ahead.
