Bridging the gap: consumer awareness of the Financial Ombudsman Service

Resume

Our latest research examines how familiar consumers are with the Financial Ombudsman Service (FOS). It looks at how many people have heard of the FOS, and for those who have, what they actually know about the role it plays. The main conclusions:

• Most people have heard of the FOS, especially those who have made financial complaints. This indicates that people are becoming aware of the FOS when they need it – when they are dealing with financial disputes.
• Many people didn’t need (or thought they didn’t) use FOS despite hearing about the service. This is because their complaints were resolved before his support was needed, meaning that the initial complaints process was effective.
• One in ten people who did not contact FOS to deal with a financial complaint had no idea that it could help solve a particular problem.

Background

Financial Ombudsman Service (FOS) is an independent government body set up by Parliament to deal fairly and impartially with complaints between financial companies and their customers. In the first quarter of 2024/25, the FOS received 74,645 new complaints, a 70% increase on the year before. They also supported 37% of the cases they resolved in favor of the consumer.

which ones has before examined the prevalence of distress, inconvenience, and delay given by the financial ombudsman as grounds for satisfying complaints. Also, which one? also studied the experiences of fraud victims, finding that around a third (32%) of fraud victims reported that they did not make a complaint to FOS because they did not know about it. This new research looks at how the British public feel about the FOS, including how many people know about it, who understand its role and who uses the service.

Most people are aware of the FOS, especially if they have made a financial complaint

The Financial Ombudsman Service is an independent government body established by Parliament to deal fairly and impartially with complaints between financial businesses and their customers. The vast majority of respondents (83%) said they were aware of FOS and had heard of the name before participating in this study.

Consumer awareness and use of FOS

Source: Which one? FOS Awareness Survey March 2024 Question: Have you heard of the Financial Ombudsman Service before? Base size: 2110

We suspected that although people had heard of FOS, not everyone would know exactly what FOS does, so we sought to differentiate between those who just knew about FOS and those who knew about it and knew what the service offered. To do this, we tested those who knew about FOS but did not use it by asking respondents to choose one statement out of four that correctly identified what FOS does. We found that not everyone could say exactly what the FOS did, with only 63% of these respondents answering the question correctly. This indicates a gap between the awareness of FOS and the true understanding of its role.

Although many people are aware of FOS and some people are aware of the services it offers, there were people who said they were not aware of it. Our research showed that almost one in five (18%) respondents did not know about FOS.

Gen Z adults are less likely than their older counterparts to be aware of FOS (50% of 18-24 year olds compared to 5% of over 55s). This is perhaps not surprising as older people have more experience with financial products and are therefore more likely to be aware of FOS.

People making financial complaints and using the FOS

In the United Kingdom, the Financial Conduct Authority (FCA) is required to inform consumers of their right to complain to the FOS. This provision ensures that consumers are aware of their options if they are not satisfied with the company’s handling of their complaint. In particular, firms must include details of the FOS in their final response letters to complainants and in any holding company responses sent if the complaint has not been resolved within eight weeks. This helps ensure that consumers know they have an additional avenue for redress if necessary.

In our research, as of May 2024, only 13% of respondents had used the FOS (for queries or complaints) – out of an estimated 6.7 million people who had ever used FOS services.

One in five (22%) respondents said they had made a financial complaint and, reassuringly, more than nine in ten (93%) of them said they were aware of the FOS. Most of these consumers are likely to have been informed by the finance company about FOS at the time of their complaint. However, a small number may have gone unreported. It is not clear whether this was because the company did not notify them or whether the consumer simply missed the information.

Two-thirds of people did not need to use the FOS because their complaint was successfully resolved

Our research found that two out of five (42%) respondents who made a financial complaint had not used the FOS. When asked why, two-thirds (66%) of them said it was because their complaint was successfully resolved without having to go to the FOS. This suggests that initial complaint resolution processes can be effective for a large number of cases, reducing the need for escalation.

Interestingly, consumers under the age of 55 were less likely than their older counterparts to resolve their financial complaint before contacting the FOS. Only 62% of under-55s were allowed to complain, compared to 77% of over-55s. Our research shows that younger consumers are more likely to seek FOS because finance companies are less likely to resolve their complaints.

Consumers whose complaints were successfully resolved before FOS was required, by age

Source: Which one? FOS Awareness Survey March 2024 Question: Which ONE of the following best describes why you have not used the Financial Ombudsman Service (FOS)? Base size: 157.

Younger people were also less likely to know about FOS or that they could use a service to solve their particular problem (15% of under-55s compared to 0% of over-55s). This means that the group most likely to need FOS is the least aware.

Some consumers did not use FOS because they did not know that the service could help them

The vast majority of consumers who did not use the FOS for their complaint were aware of the service but simply did not need to use it. However, one in ten (9%) did not use FOS because they did not know it could help with their particular problem (this statistic comes from a small sample of 157 respondents). Although many consumers have heard of FOS, some do not have a clear understanding of when and how to use it. This can prevent consumers from accessing support when they need it most. When making a financial complaint, the company they are complaining about must tell consumers about the Financial Ombudsman Service (FOS). Our research may suggest that these messages do not always sufficiently inform all consumers as intended.

Reasons why consumers do not use FOS

Source: Which one? FOS Awareness Survey March 2024 Question: Which ONE of the following best describes why you have not used the Financial Ombudsman Service (FOS)? Base size: 157. Question: Have you heard of the Financial Ombudsman Service before today? Base size: 2110.

We also found that nearly 1 in 10 (9%) of respondents with unsuccessful complaints chose not to refer the matter to the FOS because they believed it would take too long or be too difficult. This perception creates a significant barrier to fair outcomes and highlights the need for better support and clearer communication around the FOS process.

“I thought going through this process would be unnecessary.” Woman, 23 years old, London

“It wasn’t worth the trouble and I wasn’t sure if I would do it” Male, 41, East Anglia

“It was with a really big company and I felt like I wasn’t going to win with them and I didn’t want to spend all my time on it.” Woman, 36 years old, South West

Several consumers are unaware and unsure of their ability to file financial complaints.

Not all consumers realize that they can file a financial complaint when something goes wrong. In fact, one in six (16%) had never complained or heard of the FOS, and three in four (77%) of these people did not know they even had the option to make a financial complaint. When we asked this group how confident they were about seeking help to challenge a financial claim in the future, half (49%) admitted they did not feel confident – see Figure 4. Consumers need to be given the opportunity to take the first step in seeking help and the ability to challenge a claim when appropriate.

Consumers’ confidence in seeking help when disputing a financial claim

Source: Which one? FOS Awareness Survey March 2024 Question: How confident, if any, are you that you know how to get help when disputing a claim? Base: 333

Conclusion

Our research shows that most consumers will be informed of the FOS when they need it in the course of a financial complaint. However, it should not be taken for granted that consumers will inevitably take this step when faced with a financial dispute. Low confidence in seeking help when disputing a claim suggests that many consumers may need to be empowered to do so.

Also, while general awareness of FOS may not be a major cause for concern, lack of awareness of how FOS can help and concerns that the process will be complicated prevent some consumers from using FOS. Better awareness of the specific issues that FOS may be dealing with and a sophisticated understanding of the difficulties could be helpful in encouraging greater use of the service. Especially among the younger age groups who are more likely to need FOS, but are less aware of it.

Consumers can find out about the problem that has affected them and get support to make a complaint from charities, professional representatives and claims management companies. While we share the FOS’s concerns about the poor quality of complaints made by professional representatives and CMCs, and the level of commission charged to consumers, there is a need to further investigate what types of consumers these companies are using and why. This will, for example, help the FOS better understand its potential impact latest offers charge case fees to professional representatives and CMCs, helping to ensure that some consumers are not marginalised.

Methodology

Conducted field work There it is on whose behalf? between March 1 and 3, 2024. A sample of 2,110 UK adults was surveyed online and weighted to be nationally representative. The estimate of 6.7 million people using FOS was made based on 265 consumers who reported ever using it out of a sample of 2,110 (13%). This proportion (13%) was multiplied by the ONS population estimates (53,646,829).