Regulatory moves and procedural reforms, combined with a sharp fall in motor finance complaints, have eased pressure on the UK's Financial Ombudsman Service (FOS), which is now handling its lowest case volumes in two years.
The Ombudsman received 47,300 complaints between October and December 2025, down from 68,400 in the same quarter of 2024/2025. Volumes have also steadied quarter on quarter, after 46,300 new cases in Q2 2025/2026, suggesting the surge seen in recent years is beginning to unwind and that care levels have returned to broadly 2023/2024 territory.
For insurers, the trend offers a useful benchmark. Firms whose own FOS referrals or internal complaints are not showing similar stabilisation may be facing product‑specific or distribution‑specific issues rather than a market‑wide pattern.
Motor finance pause pulls down volumes
A key driver of the decline is the Financial Conduct Authority’s (FCA) temporary pause on motor finance commission complaints and its proposed redress scheme, which have sharply reduced referrals to FOS. The case pause stems from long‑running concerns over historic commission models, including discretionary arrangements where brokers or dealers could adjust interest rates and earn higher commission, potentially leading to consumer detriment.
The FCA has asked firms to pause handling certain commission‑related complaints while it designs a sector‑wide redress approach, with FOS in turn limiting new referrals until that framework is finalised.
The service recorded just 400 motor finance commission complaints in the latest quarter, compared with 14,400 a year earlier. That fall accounts for a large share of the overall drop in incoming cases but may set the stage for a later spike once the FCA’s redress framework is finalised and communicated.
Excluding motor finance commission disputes, the Ombudsman’s uphold rate stood at 31% over the quarter, meaning almost a third of non‑motor finance complaints investigated were found in favour of consumers. For general insurers, comparing internal uphold rates and themes against this benchmark is becoming an important governance tool. Where a firm’s uphold rate is consistently above sector‑level figures, it can be an early warning sign that particular products, channels or processes are out of step with the wider market.
Professional representatives and “better‑evidenced” cases
Alongside the regulatory changes, FOS has been implementing its own reforms, including charges for professional representatives such as claims management companies and some law firms. These representatives have historically driven significant complaint volumes, including speculative or poorly evidenced cases where “no win, no fee” models encouraged a high‑volume approach.
By introducing fees at certain stages of the process, FOS is seeking to change those economics and discourage weak or borderline cases. According to FOS, it is now seeing “better‑evidenced” submissions and materially fewer withdrawals or abandonments from this group, with the withdrawal/abandonment rate falling from more than a third in 2024/25 to 19% so far this year.
Focusing back on “core purpose”
James Dipple‑Johnstone (pictured), interim chief ombudsman, said the FOS is reshaping its operations to support market confidence while bringing case volumes back to what it sees as a more sustainable level.
“We are improving our service to ensure we can help underpin confidence in financial services now and in the future… our case volumes are returning to a steady state as measures we have implemented ensure the complaints that come to us are better evidenced and ready to be investigated,” he said.
“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… [providing] a quick, informal, and high‑quality dispute resolution system.”
What it means for insurers and brokers
For insurers and intermediaries, lower overall complaint volumes at FOS do not necessarily translate into an easier environment. With professional representatives now facing charges and withdrawal rates falling from more than one‑third in 2024/2025 to 19% so far this year, a higher proportion of complaints reaching the Ombudsman are likely to be better prepared and more robustly evidenced. That places greater emphasis on the quality of firms’ own complaint files, decision rationales and records of customer communications.
The reforms also interact directly with the FCA’s Consumer Duty. The Duty’s outcomes and cross‑cutting rules expect firms to identify and resolve issues “fairly and promptly” without relying on the Ombudsman as a default backstop, and to evidence good outcomes across four key areas: products and services, price and value, consumer understanding and consumer support. Against that backdrop, FOS decisions and case data are increasingly a live test of whether a firm’s actual behaviour and customer journeys align with the promises made in its Consumer Duty implementation plans.
Some of the reduction in case volumes may therefore reflect improved in‑house complaint‑handling and remediation processes, as firms respond to the Duty’s focus on customer outcomes and root‑cause analysis. FOS data will remain a key risk indicator, but the mix is shifting -- fewer speculative cases and a higher concentration of complex, potentially systemic issues. Tracking the relationship between internal complaints, redress decisions, product‑level MI and subsequent FOS outcomes will be critical to demonstrating that Consumer Duty risks are understood and actively managed, rather than identified only once they reach the Ombudsman.
Quieter, but not softer
While overall FOS case volumes are down and appear to be stabilising, the regulator is training its sights on specific product areas – from motor finance commission arrangements to travel and home insurance claims – under a Consumer Duty lens.
For insurance firms, that means less noise in aggregate, but a higher expectation that the complaints which do emerge have been thoroughly worked through in‑house, supported by strong evidence, clear reasoning and a demonstrable focus on fair outcomes. Comparing internal complaint and uphold trends against FOS‑level statistics, and explicitly tying those insights back to Consumer Duty metrics and governance, will be central to convincing both the regulator and the Ombudsman that firms are on the front foot rather than simply reacting to the latest wave of cases.
