The Financial Services and Markets Bill 2026-27, currently progressing through Parliament, includes a package of financial services reforms relevant to complaints and consumer redress. These include proposed changes to the role and remit of the Financial Ombudsman Service (FOS). In parallel, the FOS published an update on 11 August 2026 setting out the next phase of its own service reforms, following a joint consultation with the FCA.

Background

Although the Pensions Ombudsman is typically the main ombudsman for many pension scheme complaints, the FOS remains relevant where a pensions complaint involves an FCA-regulated firm, product or service. This may include complaints about pension transfer advice, personal pensions, SIPPs, group personal pensions, annuities and certain administration issues linked to regulated providers.

The reforms are worth noting because pensions complaints can straddle different regulatory and ombudsman regimes. Trustees, providers, schemes and employers should understand where the FOS fits, and how its approach may change, when triaging complaints and signposting members.

Confirmed FOS Reforms

In its 11 August 2026 update, the FOS confirmed a number of operational reforms intended to streamline and modernise the complaints process, and to focus its resources on cases that are properly within its remit.

  • New registration stage

    Complaints will be checked to ensure they are within scope and ready to be investigated before being allocated to a caseworker. This is due to be rolled out next year, following a consultation on differential case fees later this year.

  • New dismissal powers

    From 1 October 2026, the FOS will have new powers to dismiss complaints that are not appropriate for it, including where matters may be better dealt with by the courts, law enforcement or another dispute resolution process, or where there has been no financial loss, material distress or material inconvenience.

  • Applicable standards

    FOS rules will be amended to clarify that decisions will be based on the standards applicable at the time of the act or omission complained about, and will not be applied retrospectively. This provides the foundation for the “fair and reasonable” changes proposed in the legislation.

Proposed Legislative Reforms

In addition to FOS’ own service reforms, the Government has proposed legislative changes through the Financial Services and Markets Bill. The broad aim is to make the FOS faster, more predictable and more closely aligned with the FCA’s regulatory framework, while preserving its role as an accessible dispute resolution service.

Key proposed reforms include:

  • Time limit

    Introducing an absolute 10-year long-stop for bringing complaints to the FOS, subject to the FCA being able to make exceptions where rules provide.

  • Referral mechanism

    Requiring the FOS to seek a view from the FCA where there is ambiguity in the interpretation of FCA rules or where an issue may have wider implications across the financial services industry.

  • Fair and reasonable test

    Adapting the test used by the FOS so that, where firms have met their obligations under relevant FCA rules, they must generally be treated as having acted fairly and reasonably.

  • Organisational changes

    Giving the Chief Ombudsman overall responsibility for FOS determinations, with the aim of improving consistency in decision-making.

  • Mass redress events (MREs)

    Giving the FCA clearer tools to identify and manage large-scale redress issues. This is particularly relevant in pensions where, for example, complaints about defined benefit transfer advice can give rise to high volumes of similar claims and wider industry implications (e.g. the British Steel Pension Scheme).

Practical Considerations for Pension Schemes

For most occupational pension schemes, the reforms will not displace the central role of the Pensions Ombudsman. However, trustees and employers should remain aware of the changes where complaints involve FCA-regulated firms, products or services.

Schemes may wish to:

  • ensure complaints processes and member communications clearly distinguish between the Pensions Ombudsman and the FOS;
  • review IDRP wording and template responses where complaints may involve regulated advice or FCA-regulated pension products;
  • liaise with administrators, advisers and providers where responsibility for complaints handling may overlap; and
  • monitor relevant FCA, FOS and legislative developments.

The reforms will not make the FOS the main forum for occupational pension scheme complaints. However, they may make the wider complaints landscape more predictable where pension-related complaints involve FCA-regulated advice, products or providers.

If you would like to discuss any of the issues raised in this blog, please contact a member of the pensions team or your usual Brodies contact.

Contributors

Juliet Bayne

Partner

Ellie McWilliams

Senior Solicitor