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ARTICLE · 15 JULY 2026

Modernising The Redress System: Progress Over Perfection?

Herbert Smith Freehills Kramer LLP
Herbert Smith Freehills Kramer LLP
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Herbert Smith Freehills Kramer LLP

Herbert Smith Freehills Kramer LLP

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The UK Government has announced a comprehensive reform programme for the Financial Ombudsman Service (FOS) aimed at modernising the redress system and ensuring greater alignment between FOS decisions and FCA regulatory standards. These reforms introduce new referral mechanisms, clarify the 'fair and reasonable' test, and establish procedures for handling mass redress events more efficiently.

United KingdomFinance and Banking
Hywel Jenkins
Hywel Jenkins
Ian Thomas
Ian Thomas
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Introduction

The Financial Ombudsman Service (“FOS”) was established to provide consumers with a free, informal and independent means of resolving disputes with financial services firms. The institution has since grown substantially in scale, and emerging tensions between its informal dispute resolution function and its de facto ability to re-define the meaning of Financial Conduct Authority (“FCA”) Principles and Rules have become impossible to ignore.

The King’s Speech confirmed that the Government would implement a programme of reform announced as part of the broader ‘Leeds Reforms’. This is intended to modernise the redress system, refocus the FOS to its core purpose, and ensure greater coherence between the FOS's dispute resolution role and the FCA's regulatory framework. The Financial Services and Markets Bill 2026 will take forward changes discussed in HM Treasury’s recent consultation response of March 2026. These legislative changes are complemented by further changes to

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