Welcome to the Treasury Select Committee on Wednesday 18 March 2026. Today, we are talking to the Financial Ombudsman Service about its work. I am delighted to well Liam Coleman, who is the interim chair at the Financial Ombudsman Service. He is joined by Jenny Simmonds, who is the interim chief executive at the Financial Ombudsman Service, and James Dipple-Johnstone, who is the interim chief ombudsman at the FOS. We will often refer to it as the FOS, which is the abbreviation, of course. There are a lot of interims in place. Since we scheduled this hearing, we have found out on Monday from the Government—it was not to us specifically; it was announced to the public in general—that there is a consultation about the future of the Financial Ombudsman Service. If I could start with you, Mr Coleman, when did you first become aware of this plan by the Treasury to take over the appointment of the chair?

Towards the end of last year I was made aware that they were considering that.

They were talking to you about considering it. Did they say that they were then planning to consult? Did they give you any idea about the timeframe for that?

No, not directly at that stage. I had one direct interaction with the Economic Secretary to the Treasury a month or two ago, when it was confirmed that that was likely to be the direction of travel that they were going to take.

How did they contact you at the end of last year? Was it by letter or an official?

It was via James, via colleagues who were in constant discussion with him about the total reform package.

Mr Dipple-Johnstone, you were having a regular meeting and they just dropped it into the conversation.

As we have developed the package of reforms, they have raised this as part of what they want to consider.

They raised it. It was not suggested from the FOS.

That is correct.

When you had the interaction with the Economic Secretary to the Treasury, was that a scheduled meeting or was it specifically about this issue?

No, it was an introductory meeting for me to meet them. It was the first time I had met them in this role.

It was an introductory meeting at which she talked to you about the Treasury takeover of the appointment of your successor.

It was to talk about the whole package of reforms that they were considering.

It was mainly about the reforms.

Yes, in total.

Your first meeting with them was about the changes.

Yes.

At that point, had you had a chance to put in any thoughts about the changes? Given that Mr Dipple-Johnstone was aware of this at the end of last year, had there been toing and froing between the FOS and the Government before then?

No, not so much with FOS. Obviously, the chair appointment up until this point has been the responsibility of the FCA. I believe there were discussions between the FCA and the Treasury about that aspect. It was not one that was directly and principally involving us, no.

You have not had any other conversations with the FCA about these changes, as chair.

We have had conversations about what that might mean in terms of the process. At the moment, as I am sure you will be aware from previous witnesses here, the FCA has an oversight function with the FOS, which discusses a whole range of issues. The chair of the FCA and the board of the FCA have appointment rights over the chair of the FOS. As they became aware as well, there were general discussions about that, but there was not one raised by us in terms of whether it could or could not happen.

Helpfully, we are seeing the FCA next week. We have a chance to discuss some of these things there. The Treasury is now going to be appointing your successor, Mr Coleman. Just to be clear, you are interim.

Yes.

Have you had any indication that you could be made permanent or would you have to apply? There are obviously new rules.

My understanding is that I would have to apply.

That was just to be absolutely clear. The Treasury is now going to appoint your successor or the permanent chair, which theoretically could be you, if you chose to apply. What safeguards do you or your colleagues think should be written into any new legislation to prevent political pressure being placed on the Financial Ombudsman Service to make Government-aligned decisions?

In terms of the consultations that we have been undertaking, I have seen your letter, Chair, on behalf of the Committee, this morning to the EST. There is a line in there—I will probably misquote it—about the importance of the independence of the FOS. I would completely agree with that. I think you used the phrase, “It is important to be independent and to be seen to be independent”, if I quote accurately. I would completely agree. The mechanism for that about the appointment is a matter for Treasury and Parliament, really, to decide, as the legislative process moves forward, as to how that is best resolved. The independence of the organisation moving forward is really important.

As you saw from my letter, there are examples where this Committee and other committees of the House of Commons have an important role—it is basically a veto—in the appointment or dismissal of key roles. Particularly and most recently, the Office for Budget Responsibility has been discussed because of the changes there. Is that something that you have any views on, as interim chair of the FOS?

Not a direct view. We understand that that works with other ombudsmen. James talks to colleague ombudsmen across the whole sector in the UK. We understand that that does apply in other places and works well there. There is no reason that we can see why it could not work, but ultimately that will be a matter for the Treasury and Parliament to decide.

We understand that. We have seen interesting challenges for chairs of other organisations. The Government came in; remit letters were written. We had changes to the Payment Systems Regulator. It sent a letter in before Christmas and then had a phone call the night before appearing before this Committee saying that it was going to have changes. The chair of the Competition and Markets Authority was removed by the Government last year for not delivering on measures to boost growth, we believe. How could or should the Financial Ombudsman Service guarded from that sort of political pressure?

In your letter, it describes a way in which that could be done. As I have referenced, in terms of how the service could operate, that is something the service could operate to. Again, that is a conversation between Treasury and Parliament and through the legislative process to see whether there are alternate ways in which they would see that being run through. The Treasury references in its own consultation and discussion and its document that the feedback it has received, as well as the feedback that we have received through the whole consultation process prior to and after my appointment as interim chair, has spoken to that key independence point. It has come from all stakeholders. It has come from consumers, consumer groups and businesses. We recognise and I certainly recognise in this role that it important. Its independence is held at a high level by all of those consumer groups. Demonstrating that moving forward will be an important feature of wherever that legislation ultimately lands.

There is a bit of an imbalance because most consumers take an individual case to the Financial Ombudsman Service. They do not have an overall picture of what is happening. The institutions that have the best overall picture are the financial institutions that are not always biggest fans of the Financial Ombudsman Service because of the powers that you have to force them into certain courses of action, if you feel they have not acted properly for a consumer despite the consumer duty that they already operate under. Do you have any concerns about any potential loss of independence? I will just push you a bit further on that because you have been a strong body with strong powers up until now. These proposed changes could be seen to shift that balance away from consumers. Do you have any concerns that that is the case?

I do not see the changes as speaking to the core purpose of the ombudsman and its responsibility to look at each case individually, on its merits, independently and fairly. I do not see this as ultimately challenging that. Clearly, if the Treasury is appointing the chair, it is appointing one role. We are talking about the whole organisation and how the whole organisation operates. I have seen from my four or five months in role that independence and dealing with each individual consumer and each individual complaint on the merits of the case is held very tightly and strongly within the organisation.

You were appointed as interim chair. You will recall we had an unhappy session, which I will come to a bit later, with your predecessor before she left her position.

I understand that, yes.

When you were made interim chair, did you have any conversations with Ministers about what they expected of you in this role? Did they try to suggest you act in a certain way? Was it basically a political appointment?

No, I did not. I had discussions with the chair of the FCA and I had what I would call a process discussion with officials within Treasury. I did not speak directly with anybody in—

We know that sometimes political pressure does not have to be applied directly.

No.

Was there any suggestion when you were having those conversations with officials that they were expecting you to come in as chair of the Financial Ombudsman Service in order to deliver changes that the Government had predetermined?

Not particularly, no, not in that regard at all. I was aware there was an ongoing discussion per pro the consultation that was going on. I was fully aware of the fact that changes were being consulted on and the reform package was being discussed. It had not been landed at that point in time. That was not a defined package at the point I came in. It was still subject to consultation and input. I understood that it would be in part us and the FCA in terms of what we can do immediately, and there was quite possibly and likely to be some form of legislative package that would come along with that reform package. I always understood all of those were in play, but I was not given a direction to do certain things.

Do you see yourself as a champion of the independence of the Financial Ombudsman Service as is, with maybe some changes to be discussed? Which side of the line do you come to? Are you a champion of the Financial Ombudsman Service or the Government’s person in the Financial Ombudsman Service?

I would say very much the former.

The Treasury has said in its announcement of the consultation that “the Government also intend to take a power that would allow it to specify that particular rules are not to be included in the adapted fair and reasonable test or should be dealt with in a different way”. What do you understand that to mean? Ms Simmonds or Mr Dipple-Johnstone might want to add something.

My understanding of the intent behind that is that there may be some rules that are high-level rules, less precise or less specific, which may not suit direct application to a case and therefore they may be exempted from that high alignment provision in the adapted fair and reasonable test.

Is it concerning that the Government are taking power away from you as an ombudsman?

As long as we still have the fair and reasonable test and the requirement to take into account all of the circumstances of the test, I cannot think of a—

It is saying that the Government could take a power that would allow it to specify that particular rules are not to be included in the fair and reasonable test. You are, on the one hand, saying, “If we have the fair and reasonable test, it is all right”, but they are already saying that they would look to adapt that.

My understanding is that it would drop them out of the requirement to determine the case in line with the regulatory rules. If the firm can demonstrate that it has complied with the rules in accordance with the intention behind those rules, we would have to uphold the firm’s handling as fair and reasonable. There may be some rules that might not suit that and therefore they would default back to the complete fair and reasonable test. We would not be required to operate against that specific rule.

Is that complicated for you to interpret?

I cannot think of the circumstances in which the rule might be used. My understanding is that this is there as an eventuality. At the moment, a lot of the detail around the test is provided for in the dispute resolution rules, which means that, if something is not working, we have an opportunity through consultation to amend the rules. My understanding is that the Government’s proposals would put more of that in the primary legislation. Therefore, if there is a problem, we would have to change the primary legislation, which can take some time. My understanding is that this is an opportunity to give flexibility, but I cannot think of circumstances at this point in which that would be invoked.

We will get on to legislation in a moment. Are there any things that you would recommend—you are interim ombudsman at the moment, but you have been working there a while—being taken out, which would make it better for consumers or easier for you to do your job better and that are positive changes?

I cannot think of anything at the moment that I would take out of us being able to look at the totality of the case and it operating on a fair and reasonable basis.

I am sure you are making your views known. Do you think this would make it difficult for you to do your job?

I think we will be able to do our job as long as we can continue to have good access to the interpretation of the rules through the referral mechanism. That will be key to make sure that, where we feel there is ambiguity, we are not stepping into that quasi-regulator role. If we are able to get quick and early interpretation from the regulator about the intent behind those rules, we can apply it to the individual specifics of the case. For me, that is what is going to be really important. That process also needs to be open and transparent, so that people can see the requests, they can see the answer that comes back and the individual consumer can see how it has been applied to their case.

The Government are also going to go ahead with the approach that they have set out to provide you, as chief ombudsman currently, with overall responsibility for determinations by the Financial Ombudsman Service. Can you give us an example of how that would work in practice?

If we take, for example, something like unaffordable lending, we get many thousands of cases. Some stakeholders are concerned that we may not be consistent in terms of the application of those rules. One of the things that we want to be able to do is to apply a decision framework. We want to be able to set out our working out as to how we will consider the relevant rules, the relevant law, in arriving at cases, and to delegate that throughout the service so that it can be applied by all of the case handlers within the service. It is about supporting that consistency.

Will that benefit the consumer?

It will benefit consumers, if we are open and transparent about that. When they bring their complaint to the service, they can see how it is likely to be considered, they can understand what is the most relevant evidence to give us in order to be able to make the complaint, and they can be supported through that process. That ability to deal with cases quickly and consistently and explain our working out better to consumers is a positive, yes.

You have a really important role in our system for many retail consumers who are not expert in financial matters, who bring their problems to the Financial Ombudsman Service in good faith. You have an important role as ombudsman to rule on those. It is a very important power that you have. Are you confident that these changes are going to maintain your independence or do you worry that consumers will lose out and you will lose some independence in making these decisions?

They will give us the independence. My understanding is that the driver behind some of the proposals is to continue to encourage confidence in financial services. That will only happen if our decision-making is rigorous, open, transparent and happens at pace. There are a number of checks and balances that can be put in place so that everyone can take assurance of that. In terms of the specific package of reforms, it speaks to a lot of criticism of the service over past years and gives a good answer for many consumers.

You will get criticised from both sides, but you will get a lot from the financial services industry. What is your message to consumers who would be concerned that Government reaching into the Financial Ombudsman Service could mean that they are losing out? What reassurance can you give that you are going to resist any pressure not to stand up for their interests?

The impartiality of the service runs throughout the service and all its staff. It is passionately held by all my colleagues within the service. We will be open and transparent about our application of powers and our decision-making. We will continue to publish our determinations. We will continue to produce thematic reports so that people can see how we are applying the rules, understand our cases and absolutely be reassured that we will be there to help them.

Just back to you, Mr Coleman, you are an interim chair. To the world or anyone listening, I am not suggesting that you have applied or anything; we do not know, but, for argument’s sake, if you were to be appointed chair under the new procedure—you are an experienced non-executive—would you feel pressure to act at the Government’s behest? I just want to go back to that again, given what we have heard. You have a team working independently, but the Government now have a role in that appointment.

Notwithstanding the basis of the appointment, which we have already touched on, and who and how it happened, I would feel that I could perform that role to ensure the independence of the service, as James has outlined. James has already mentioned—Chair, you have mentioned it as well—the role it plays within the financial system. If I refer to it as an ecosystem, the financial services ecosystem is unique and important. If that is not seen to be robust, independent and impartial, that will be a loss to the overall structure of the system.

When your predecessor came in front of us and was unable to answer certain questions, we were very helped by the FCA’s oversight because they were able to provide us with very detailed information about what had happened when and some of the challenges between the chair and the chief executive officer at the time. I will not repeat all of that. If there is a change in that oversight, I am concerned that we will not have that ability to ensure you are open and honest to Parliament. We had a challenge getting openness and honesty. Is it an important aspect of your role as chair and the role of the Financial Ombudsman Service that you are open and honest to this Committee?

Absolutely, yes.

Is that a guarantee that this will continue to be the case?

Certainly from me, yes, and I believe on behalf of the service as well, I should say.

I am going to bring in Mr Dean in a moment, but, before I do that, Ms Simmonds, you came in as chief executive officer. It has been a bit of a rocky time for the Financial Ombudsman Service. We will just gloss over it momentarily. People can go back and read our previous work on this issue. What problems have you found in the service? What have you been focusing on as chief executive officer? Jenny Simmonds: I would not have said there are problems, but there has been a lot that we have been improving on. One of the focus areas that we have taken on board in the last year is to try to improve the timeliness of our service. Our people have worked really hard to ensure that customers get answers quicker. In terms of the things that we have done, we have increased the number of customers who receive a response within three months; just under half receive that. Over three-quarters receive an answer within six months. We are also mindful that there are quite a lot of customers that have been waiting more than 12 months. We have put a really concerted focus on that. We are hopeful that we can bring that down to 30% of the figures that we had at the start of the year by really making sure that we are applying our resource and skills in the right places and making sure that those customers get the support they need.

You are dealing with the backlog and speeding things up. Jenny Simmonds: Yes, absolutely.

What was leading to that? When you came in and saw what you were inheriting, what do you think led to it? Jenny Simmonds: Both James and I have been part of the leadership team for two years prior. We were very focused on the improvements leading up to that point. Some of the good things that were done prior to the appointments a year ago have enabled efficiencies to be delivered through 2024-25 and into this year. What we have done is building on that with a continued focus. We launched our portal during the year, which enables consumers to see where their case is at and have greater access to understand the information that has been submitted. We are further improving the way that customers can raise a complaint and we have some things launching at the beginning of this next financial year. For me, it has been an evolution in terms of building on what we have had before, making sure we are focusing on the stages of the customer journey that have proven challenging or take too long in order to know what we can do to improve it and reduce that time even further.

We are going on to some of the things around transparency. You are telling us confidently that it is more transparent for consumers, but, given the reforms that we are discussing with Mr Dipple-Johnstone and Mr Coleman, are you confident that a consumer who could get a case through now would still be able to do so after the reform package is introduced, or is there a risk that they would not be able to get a complaint through? Jenny Simmonds: We are confident, completely. We believe that some of the reforms will help it to be a more efficient process as well.

There will be no change. As a consumer, I could come to the FOS with something after the reform package and you are confident that I would be able to get it through. There must be some reason for the change. I am just wondering what you are interpreting as what might not qualify as a case with the FOS after the reform. Jenny Simmonds: Some of the package of reforms is the changes to the dismissal rules, as the ADR regs have changed. If you do not mind, I will ask James to talk to that.

To illustrate it with some examples, some of the proposals that we are making are around the dismissal rules. They are for consultation. They are absolutely still out for consultation. We dismiss around 800 cases a year out of the 220,000 that we deal with. Sometimes we cannot dismiss a complaint and we have to take it on and investigate it, but we may not uphold it. There might be a small number of those cases that in future, if the proposals go through, we might dismiss. For example, we sometimes get multiple complaints from individuals who are vexatious. They abuse our staff; they make threats to them; they post things online about them. If they bring us a complaint, we will still assess it, but we may determine that we are not going to take that case through our process because of the behaviour of that individual.

They would lose their consumer rights. It is never right to be rude to staff, but that is different to being vexatious, is it not? I could be a very annoyed consumer getting quite irate about my case. We all deal with constituents all the time who have challenges. That can sometimes lead to heightened behaviour, which is not always excusable but is sometimes understandable. You are saying that, even if they have a really important case, you might refuse to deal with them because of the behaviour of the individual.

We would have the option. We would look very carefully at whether there is any vulnerability.

I was going to say that there is an equalities impact.

Absolutely, yes. It would be a discretionary power. We would absolutely look at the circumstances of the case, but sometimes we have people who bring us multiple dozens and dozens of complaints, which are not in the category you described of being significant or major complaints, and they abuse our staff. We would like the option, rather than having to wait for a vexatious complaint, to look at whether the complainant is vexatious. That is a consultation proposal. We will absolutely take on board any feedback.

I was just going to add—James, you might want to add to this—that we do have an escalation process. It is not straight from the point of vexatiousness to dismissal, if I can put it like that. We have the opportunity—and we do use that opportunity—to apply certain approach channels, to remove some of the person-to-person contacts and do it more by email and by document to reduce the pressure or stress that the consumer may be facing. I just wanted to say that the point is not just a single point. We have tools and approaches that we seek to use as escalation. The person would not lose those.

We all deal with the members of the public who we all support and we have different ways of doing that. I appreciate that. Just to be clear, between the two of you, are you expecting fewer consumer cases to be successful? Is this the only area where you are going to try to possibly take some people out of the system?

Primarily it is around the dismissals. In terms of success, we already have to take into account the relevant law and the regulatory rules. That will continue to be the case. There is nothing intrinsically in the proposals that we are making that ought to change our uphold rate, no.

Just to narrow it down, of the previous cases that have been successful, are you expecting a percentage of those to not be upheld because of the narrower remit and having to stick to the FCA’s rules?

In my view, not in significant numbers. There might be the occasional case, but not in significant numbers.

You would monitor that.

Yes, absolutely. We have committed to being open about referral rates, numbers of cases and uphold rates. We publish all of that information and will continue to do so.

I am going to go to Mr Dean in a moment, but, finally, on the recruitment timetable for the permanent chair and all the permanent positions, you are all interim. It is uncomfortable for an organisation to have this many interims for this length of time. What is the timetable for the recruitment for your permanent position, Ms Simmonds? Jenny Simmonds: That is a matter for—

Yes, that was the wrong way around. Mr Coleman, what is the plan?

I should take that. As we said today, the FCA still has the appointment right for my role. When I came on board, it was to try to support the organisation through the generation of the reform package, which you have seen announced this week. I would expect now that FCA will be discussing with HMT, because Treasury does have an approval right, as we stand today, over that appointment. I would expect that they will be having that discussion over the next number of weeks and months.

The thing is that these new changes to appoint the chair directly would require legislation. What you are suggesting, I am guessing, is that there would be a permanent chair appointed under the old process.

There may be.

You do not know.

I do not know. That would be a matter for FCA with Treasury.

Given the need for legislation, you could be interim for a very long time, if it is the new process that appoints your successor.

I have a term to my current appointment. They would have to come and ask to extend that. They would have to have a discussion with me, clearly, if I was willing to do that. I am not suggesting for a second that I would not be, but they would have to come to me because it is a limited-time appointment at this point in time.

Remind us of the timetable. What is the end date?

My appointment was for one year. My appointment goes from October 2025 to October 2026.

We are all cynics about how long legislation takes. It is unlikely there will be anything in place. We will talk to the FCA and others about this. What about the other roles?

For the executive roles, it is slightly awkward with the two individuals.

You are in front of a Committee. They could watch it on the telly if they were not here, so tell us anyway.

The current approach is that it is for the FOS board to decide and recommend with oversight from the FCA. Now we have the package announcement done, I will be taking those discussions forward with the FCA. Therefore, I would want to be able to make permanent appointments to those roles because it is important for the organisation to have permanent leaders in those roles going forward.

We would all agree with that. Given that your term is up in October of this year, can I surmise that we would hope that you might have made appointments by then?

It would be wrong of me to guarantee a timescale.

I appreciate that you have other people to talk to.

I would not want to be hanging about in that regard.

In summary, the changes being proposed mean that potentially some people will have cases not taken up by the Financial Ombudsman Service that would have done previously. Is that a fair summary?

As James said, it is a small number, we believe.

There could be consumer detriment to those people.

Whether or not there is detriment is whether or not the complaint is one that would have been upheld. Some of the complaints that come through, which we might be dismissing in future, may not be complaints that go anywhere.

That is easy for you to say. The consumer, though, will never know whether it might have been upheld.

Yes, absolutely.

Can we move on to the case volumes that are coming through? Perhaps these questions are for you, Ms Simmonds. I was looking at the figures. For 2025-26 you were hoping to resolve 270,000 and now the forecast is that it will be about 235,000, which is not far off the figure that you did achieve in 2024-25, an incremental improvement. Next year we are hoping to jump up to 245,000. The obvious question is whether you have the resources to deliver on that figure. Jenny Simmonds: A big variable year on year is our motor finance commission cases. Over the last two years, we have done quite a lot of preparatory work in terms of on those cases, but we have not been able to get them to resolution because of some of the legal and regulatory matters that have been ongoing. We are hopeful—you will have seen that in our proposal for next year—that we are able to close a significant volume of that, 60,000. That makes up a big portion of the additional resolutions next year. We have done an awful lot of work ahead of time to get ready for that. That is why you see a bit of a shift year on year. It is timing between when big chunks of the work are done versus when the cases can be resolved for customers all the way to the end.

Could you explain that in a bit more detail? When I look at the breakdown here, we have motor finance totals and non-motor finance totals. You had 10,000 budgeted and you resolved 15,000. Non-motor finance cases, it was 260,000 versus 220,000. Are you saying that the difference in that non-MFC total is that you were doing lots of preparatory work that does not show up in the resolution of cases but took up a lot of your time? Jenny Simmonds: Yes, there is some of that. The other trend that we have seen this year is we have had fewer easier-to-close cases and more cases that have been referred to an ombudsman decision. That has meant that the cases that our organisation has been working have taken slightly longer on an individual basis because they have just had a greater degree of complexity. There has been a greater degree of cases that have been referred to an ombudsman for a further review of the case. That is the challenge with a demand-led business in terms of being able to anticipate the mix of cases that we are going to receive and make sure that we plan appropriately in terms of the organisation size that is needed. It is more in terms of that shift from year to year. In terms of the volume that we are anticipating delivering by the end of this financial year, it will not be far off the total that we did in 2024-25, albeit some of them have greater levels of complexity on average.

If the numbers remain stubbornly high and the complexity is increasing, there will be a concern about the quality of the resolutions that you are now filing. If you need to try to churn through this volume and it is complex, surely that will undermine the consideration given to each of these cases. Jenny Simmonds: No, not at all. Quality is a really high priority for our casework staff to focus on. We set a target and we keep exceeding it. We are very happy with the quality of the cases that our workers provide. It is about how we get both. The focus is about how we make it easier for our casework colleagues to do their job. It is not about spending less time on thoughtful consideration of the information that is provided. It is about taking out some of the more administrative tasks that they have to do so they can focus the time that they have on higher-level thoughtful consideration.

You are here in front of the Treasury Select Committee. You could make a plea for more resource, if you needed it. You do not think you do; you can cope with the resources that you have. Jenny Simmonds: We have planned for an increase into next year, but it is always that balance in terms of anticipation of what we expect to get. Because we have already done the preparatory work for a big chunk of the cases in the upcoming year, the uptick in resource that we need to achieve the overall volume is not as high as it would otherwise have been.

In terms of efficiencies, everybody is talking about how AI can assist, particularly on the administrative side. What is the FOS’s use of AI at the moment? Is it integrated fully into it, or is it something that staff are dipping their toes into? What are your plans? Jenny Simmonds: Yes, we use AI in the organisation, primarily to automate some of the more administrative tasks, such as summarising documents. More on the support side of the fence, it is using Copilot to make sure reports can be more readily produced to a good quality more quickly. On the casework side, it is around things such as automatically being able to allocate our cases to the best caseworker. We look at the profile of the cases that come in and try to match that to the caseworkers with the best skills so that they get routed to the right place. AI helps with that. It is more about how we make the process efficient rather than any decision-making. We do not have any AI in our decision-making process. It is more about the process of how we get casework to the right colleagues and enabling them to do it in less time by helping them manage documentation.

Is this staff making general use of publicly available tools or have you put investment into closed systems of your own? Jenny Simmonds: We have changed strategy over the last 12 to 18 months. We did have an earlier foray where we were trying to build our own machine learning. Although we did get value from that, it is challenging and AI evolved quite a lot. Our strategy now is to use more off-the-shelf tooling. Our core casework management system is Microsoft Dynamics and our core workforce management system is Workday. Both those platforms have an AI roadmap, so we are looking at the AI products that come with those platforms. We are very much looking to leverage those to help improve the efficiency of some of the areas of work that we do.

You are using those off-the-shelf platforms. Can you reassure us about data protection issues? Clearly, if you are feeding people’s personal financial details into an open system, that has dangers to it. Jenny Simmonds: We are not. We do not allow any of our data to go outside our perimeter.

Mr Dipple-Johnstone, I wonder whether I could speak to you about whether or not you think you have enough capacity at that senior ombudsman level. When people go to an ombudsman, they want an ombudsman to make a determination. We know that is not always the case. Do you think you have sufficient capacity at that end?

As part of our structure, we have organised ourselves into directorates based on themes of casework: fraud and scams; consumer credit; pensions, investments and insurance; and mass claims, which deals with things such as the car commission cases. Within that, we have a mix of ombudsman and investigators. To provide that flexibility you described, we also have associate ombudsman, who are contractors who work with us. We also have operational performance managers who support us in terms of managing teams. To illustrate that, over the past year, where we have seen a higher referral rate coming through with more people asking for an ombudsman’s determination, we have released some of the ombudsman who are managing teams of investigators to focus on issuing decisions to help more customers at decision stage. We have backfilled them with the operational performance managers, who do not do decisions but just focus on managing the investigators.

Do you keep figures on the proportion of the people who request an ombudsman decision versus the ones who get one? Has that figure been declining?

No. We have seen more people request an ombudsman’s decision and we have been issuing more ombudsman’s decisions. It has typically run at about 17% or 18%. At times, over the course of this year, it has run up to about 20%.

When you were in front of us last year, you told us that staff levels should increase to 3,300 by the end of the year. I think that was at the end of last year. Did you make that figure? What is the progress looking like? Jenny Simmonds: It is about 3,200 when we look at permanent staff, staff on fixed term contracts and the contingent workforce that we use via third-party contracts.

Are there any further targets for next year? Jenny Simmonds: Are we going up slightly? To the point you raised earlier about the increased resolutions, we will need more staff, but not as many for the reasons that I articulated.

You do not have a benchmark.

Can I just follow up on AI? Some would say that AI should be used to make decisions and that it could be more accurate than human decision-making. You were very careful to say, “AI does not make decisions”, but can you see a world where that would be appropriate, given the way that technology is improving and the fact that human error also occurs? Jenny Simmonds: Yes, potentially. There are some foundations that we need to get in place first. We need to make sure that we have really clear decision frameworks so we know what the logic is that is applied in order to reach a decision. That is being done in conjunction with some of the reforms in terms of understanding what the logic needs to be, but, whilst we will probably be able to automate more, for us it is still important that there is a human who looks at it—it is almost AI-assisted—because of the individual circumstances of the case that need to be considered. We do not envisage that it is going to be something you can fully automate.

The point that Jenny makes is really important because we are making decisions on individual complaints. It is quite possible that you could have two individual complaints that are unbelievably similar, but there is just one factor that differentiates the two complaints. It might be vulnerability or another aspect, which might cause that complaint to be upheld in one circumstance and not upheld in another. To your very question, if we were introducing AI into decisioning, we would want to be highly confident that it would pick up on nuances and unique differences like that, so that, if a human was looking at those two and could see that difference and would make a different judgment, the AI would equally reflect that.

All I would say is that the Chancellor made a speech yesterday where she spoke a lot about AI and the importance to the Government’s growth initiative. Everyone would understand the point that you have just made, but there is a point about AI taking you to that narrow point where humans intervene to improve the efficiency of your organisation massively. People do not need to fear it, but you could use it to get to that point where you can make those differentiations. AI helps you draw out those, surely.

It is not from a position of fear we would approach this, certainly, to that challenge. It is from a position of us gaining confidence, as we move through, at each step and stage that we introduce it, that it would not miss those types of issues.

Finally, are you making sure that AI being used by people writing to you is caught? There are some odd things that happen such as hallucinations. There are people writing cases better or differently.

Yes, absolutely. Chair, to your point, we have seen feedback from industry and the complaints departments of a number of financial services firms. Some of them have spoken to me. They have seen the volume of the supporting material—this is what comes along with a complaint letter; that is the easiest way to explain it—go up by a factor of 10-plus.

Is it all real? Mr Dipple-Johnstone is shaking his head vigorously, for the record.

We are not quite seeing the volume that the financial services firms are seeing at this point in time, but I would suspect that we will see that volume increasing. We are already seeing some of that, which is AI-generated, more often than not quoting legal cases that may or may not be relevant to the particular complaint. It is a challenge. It is a current challenge that our investigators and ombudsmen are facing. They then have to work through that to make sure we are not in any way ignoring any of it and identifying what is relevant and what is not relevant. The volume of what comes with a complaint has definitely increased.

There is lots that we could delve into there, but I am going to ask Mr Luke Murphy to come in now.

Buy now, pay later issues are coming into your regulatory perimeter from July 2026. You are expecting 2,000 cases. I believe that was the statement made. Is that just in that year? Is it per year in future?

No, it is just in that year. I know colleagues can speak to this because they have been in service much longer than me, but, when something is brought into the remit of the regulator and therefore falls to be part of our service, you tend to see a scenario where it takes time from the point at which it is brought into the regulatory remit for complaints to flow through. That would be for the year in consideration. It would be highly likely to increase.

Do you have estimates for how it might look in the trajectory following?

Not beyond this year, no, but we have spoken to other financial ombudsmen around the world who have taken on similar products in their jurisdiction. That is the basis of our planning. They have seen an initial slow take-up but it then building quite considerably on the back of that, which is why we have said we will monitor the situation really carefully.

There will be consumers for whom the regulatory perimeter was not in place when they had the issues that they are coming to you for. Do you have a strategy for dealing with those? There is going to be quite a lot of those accumulated. How is your set-up going to triage those to ensure that you are focusing on those who have relevant issues with regards to when the perimeter comes in?

We have been running a project over the past year to prepare for this, looking at how we can improve the front door to the service, first, to help people understand whether the case is one that falls within our jurisdiction and, secondly, to make it easy for people to raise complaints with us. One of the facets that we are particularly interested in keeping across is around affordability. It may well be a product that people have multiple instances of and therefore some might be completely within jurisdiction, some might be at the border and others might not, but it is the whole pattern that we need to look at to understand some of the considerations. We want to make sure that the front door of the service is easy for people to use and is really clear about our jurisdiction.

If you are a consumer and you have taken out one of these products through a merchant-owned avenue versus a third party, is it going to make intuitive sense as to why you can cover one but not the other?

That will be part of the challenge in terms of being clear with people. We have a lot of experience of explaining our jurisdiction. Our jurisdiction is not straightforward in many areas and has evolved over time, and we would apply the same principles. We have been speaking to some of the consumer groups that support people in this space to learn from them and understand how they are engaging with their clients so that we can apply similar techniques ourselves.

Do you think that the exclusion of merchant-owned products sensible?

We will see when we get the cases coming through. I might have more information next year.

There is a list of questions for us already written for that.

Just moving on to crypto-asset activities coming into the perimeter, what is that going to mean for the service?

Similar to how we have been working on buy now, pay later, we have been looking at what we might do if crypto comes within our perimeter, what might come in and what kind of cases we would deal with. At the moment, we mainly see crypto-based complaints as part of a fraud or a scam payment journey, where somebody has been incentivised to purchase crypto or to make a transfer through their crypto wallet. We have some experience of the kind of technology that is out there. We are seeking to understand more, work with the FCA to understand how their rules are going to interact with the sector, and prepare to make the service—it speaks to what Jenny was describing before—as digitally enabled as possible, because in these particular cases quite a lot of the evidence that we need ought to be readily available in a digital format. The easiest way for people to get into our service and bring us their complaints is what we are interested in providing.

The gateway opens in September, but you have not incorporated any estimates into the current 2026-27 budget. Is that sensible?

Yes, until we know more about it. We will keep the situation under review as we go through and see how many firms are coming in and how many customers they have.

Just moving on to targeted support, in the joint statement with the FCA you said that you would deliver a consistent and proportionate dispute resolution approach to targeted support. Do you have any idea when you are going to deliver that?

We expect that these complaints might take a little time to come through because the support has to be given, acted upon, something has to go wrong and then a complaint has to be dealt with by the firm and then it has to come through to us. The model that we are applying within the service is very similar to that which we applied with the PSR when it introduced the new fraud and scams changes around APP, which is to engage with consumer groups, engage with industry, understand how the rules are being applied and then share examples of how we propose to look at these cases as they come through. With that, we provided case studies and examples so that parties could understand our likely approach. We anticipate a similar model this time around.

If I could just return very quickly to that question about merchant-owned on buy now, pay later, in your experience, with one area being covered and one not, could you foresee greater innovation in the merchant-owned space that is going to require regulatory catch-up? That is one of my concerns about its exclusion. Can you say any more about your concerns in that area?

It is something that we are going to have to very much keep across the pace of. We are constantly looking to see what is happening. Our starting point would be that it needs to be clear and easy for consumers to understand what their redress options are and be able to access our service as quickly as they can, if they need to.

One important feature—it touches on a few of the questions that you have asked around the sectors that you have touched on in your questioning—is the feedback loop that needs to and will exist between us and the FCA as regulator in those spaces. We need to ensure that we are feeding back—and we do—the data and the behaviours that we are seeing through our complaint process back into the FCA because ultimately the FCA can then decide whether it wants to review its regulation in that space and, to your point, the perimeter and what sits inside and outside. We do see it as an important function of what we do, alongside investigating the complaints, that we are taking data, learning and information from that and feeding it back into the FCA process so that they can consider any changes they may want to make as well.

Can I just ask a bit about how that process works? Are you invited explicitly by the FCA to provide that feedback? Is it ongoing?

It is ongoing. It is at a number of levels. James and the team interact at a number of levels with the regulator in terms of that feedback piece. The Chair has already mentioned the oversight committee. At the most strategic level, we have that feedback loop opportunity in the oversight committee structure that we use. James, I do not know whether you were going to touch on that.

We also have some referral gateways where we can refer issues directly through to the regulator, to put the issue on their radar, to seek interpretation or to highlight our concerns. We have a number of mechanisms through which we can do that.

My questions are still on operational matters, Mr Dipple-Johnstone. During the financial year 2024-25, the Independent Assessor found a dramatic increase in cases where customers’ complaints about the FOS concern service standards and a significant decrease in cases deemed to be satisfactory. You have covered some of this, but I just wondered what you would say the broad explanation for that trend would be.

We deal with about 220,000 cases a year. Around about 3,500 make a service complaint through to us, and a few hundred go through to the Independent Assessor. Typically, the kinds of complaints that come up are poor communication between our staff and the customer, a lack of clarity, a failure to meet commitments—for example, that we will call somebody back on a particular date—and a lack of explanation in terms of how we have approached their case. We take that into the service and look for those trends and patterns. Some of that is about retraining for colleagues and supporting them; some of that is about how our systems work. We have had a lot of complaints historically about delay. The service has taken too long to get back to people. I appreciate that that is hugely frustrating if people are waiting for an answer, which is why we have invested in improving the pace. We want to make it easier for people to complain about us as well. We are trying to support people to give us feedback, act upon that feedback and improve the service.

The Independent Assessor has ongoing concerns about how vulnerable consumers are treated. We have spoken a little bit about the difference between a vexatious person, for whom there are correct procedures for dealing with, but what further room for improvement might there be? You have done some, but what other steps could be taken?

We have put around 2,000 of our staff through vulnerability training over the past year. We have taken people out the business for a period of time and they have gone through vulnerability training. We have actually seen an increase in terms of our capture and our identification of vulnerability. That is the starting point: to be able to have those conversations with customers, record their needs and then deliver those needs. Dame Gillian’s feedback to me is that we are still getting that wrong and we are not seeing the person behind the process. That is where we are really doubling down at the moment: to try to make sure we are seeing the person, not just the process.

Can I just add to that? It is a really important point. When I came into the service, we embarked on a review of the governance committee structure that sits below the board in the FOS. We have just changed that and we are in the process of establishing—it will first sit in a few weeks—a reform and customer experience committee that I will chair. Part of its remit will be to guide the organisation through the implementation of the reform package, but its substantive form going forward will be looking at the customer experience. That will be part of its remit in terms of looking at vulnerability and how vulnerable customers are treated. I just wanted to add that because we felt it was important to have a focus on that at board level in our strategic leadership.

I am sure Dame Gillian would have some examples. Some of the utility companies used to be awful and they have improved. They are just saying, “Could I just double-check whether there is any vulnerability?” For example, where we have works being done, it is finding out what that—

Yes.

I have some questions for Ms Simmonds. You introduced fees for claims management companies and there has been a very significant drop in the number of claims since you introduced the charge. How have you gone about assessing the impact of this change on vulnerable customers? Do you have any data? Jenny Simmonds: Yes, we do track that. We have had an increase in the complaints that come directly to us from vulnerable customers. Some of that might be because we are better identifying the said customers, but our full impact assessment is due a year after launch, which is coming in Q1. We have not completed that analysis yet, but we are not seeing any adverse impact as a result from all the preliminary information that we have.

As part of that impact assessment, are you going out and surveying customers and understanding customer behaviour? Some customers might prefer to go to a claims management company because they just do not know how the system operates and all the rest of it. Are you doing some on-the-ground surveying of customers? Is that a question for Mr Dipple-Johnstone?

We will try to get as much information as possible about the earlier stages of the complaints process. Sometimes we are limited through things such as data protection in understanding customers who did not come to us and their experience, but that is the kind of thing we want to look at. We also want to understand what issues have come through, how quickly we have been able to look at the issues and what kinds of cases we have not seen. Last year, we saw significant growth in complaints about irresponsible and unaffordable lending, a large proportion of which were then withdrawn or abandoned. We want to understand a little bit more around the cases we are seeing now and what is making them come through. We still see that about 85% of the customers who are vulnerable come to us direct. We want as many people to come to us and find it easy to use as possible.

Mr Coleman, as chair, the exam question here is actually quite simple. Are we confident that this change is not shutting off vulnerable people from the FOS? That is something you need to study in this impact assessment. Are you confident that the impact assessment itself or work in preparation of that will give us a robust answer to that question?

I believe so, yes.

In terms of the metrics, you have seen this drop-off. What is the sense of the FOS—again, this is maybe for Mr Dipple-Johnstone—as to whether you are seeing less meritorious complaints fall away and better evidenced complaints forming a larger proportion or a reduction in poorer complaints? What is the mix? What is your take on that?

It is early days. As I say, we are going to carry out the review, but we have seen the proportion of withdrawn and abandoned complaints fall away and the uphold rate for represented complaints begin to come more into alignment with the uphold rate for individuals who come to us directly. It is early days, but it suggests that greater due diligence is being done on the cases that come through.

What discussions do you have with claims management companies about case management and so on? You get feedback from the individual users. What feedback are they giving you?

We get feedback from individual claims management companies in their day-to-day interactions on cases, but we also regularly meet with the trade associations—we have had a couple of meetings over the course of the past year—and with some of the firms working on particular issues. We will include that as part of the feedback that we put forward.

I want to move on a separate but related topic, which is your funding model. You are talking about differentiated fees from April 2027. There are various ways that you can do that, such as by stage or complexity. Are you able to shed any light on which direction we are going on that? Jenny Simmonds: We consulted on that as part of the 2026-27 budget and we got really clear feedback. There was a high level of support for differentiating by stage. It was understood that stage represents the amount of work that we have done and it is right that, where more work is required, perhaps a greater fee should be charged. The bit that we are going to be working through is understanding what the right price points are in terms of in regard to that differentiation. That is what we will be working through, in conjunction with understanding some of the impacts of the reform work, in November when we consult on our 2027-28 budget.

Is that price point related to the value of a claim or something else? Is it just the overall price point? Jenny Simmonds: It is in regard to the cost to us of doing the work. That is primary, because we are a not-for-profit organisation and so our funding needs to cover the cost that we incur to do the work.

Presumably, lower-value cases take up as much time as higher-value cases. Jenny Simmonds: They can do.

If you streamline processes in future, how easy is it to change the fee structure? Jenny Simmonds: This is the good thing about some of the work that we have been doing this year to develop a new billing system, which is going to launch in April. That simplifies matters and the billing logic that we have. When we want to implement differentiation, subject to consultation, we will have the foundations in our new billing system that make it much easier to do so both upon initial launch and to adjust price points in the future beyond that.

What tolerance do you have on price points that you can just do without consultation? Jenny Simmonds: We consult on all price points.

You always have to consult, so for any change, you have to get it right first time.

Yes.

My final question or set of questions is on the cut in the interest rate from 8% to Bank base rate plus 1%. How are you going to monitor whether this leads to firms delaying resolving cases because the cost of them is lower, if they do not have to pay the 8% but base plus 1%?

We will monitor the pace at which we are getting through cases and when cases are being resolved. We are also improving the amount of detail that we gather about the awards that we make at the moment. We categorise them into bands. We are going to be recording much more detail as to exactly how much we have awarded and what the interest is on top of that. Just to be clear on that interest rate, where the consumer can demonstrate the loss that they have incurred—for example, they have had to put money on their credit card or they have had to take out a loan—they will absolutely get that level of interest and that amount in their reward. If firms delay making the payment, they will get the 8%. If we have set out a time by which you should make the payment, if they do not make that payment, the 8% applies.

If I am making a complaint to the FOS—I am not; do not worry.

It is your right, Mr Grady.

It is my right. If I do make a complaint to the FOS and I can show that I have had to put something on my credit card because of my own individual circumstances, I will be able to get that higher rate because that is part of my loss.

Yes, we would seek to put you back into the position you would have been in, yes.

Do customers and complainers understand that? Is it clear enough to them that they can make a claim for that head of loss?

It is part of our process to work with people to understand what their complaint is about, so yes, most people who come to us ought to know.

How have you tested that understanding?

We get feedback about the service and whether awards are accepted by complainants.

I want to try to get to the heart of this issue of what will be perceived as a trade-off between things that industry will welcome, because they are more efficient, and consumers will fear because their protections are less. I see that there is a quote from Simon Morris from CMS in the FT today, where he says, “The ombudsman has for too long been a loose cannon, firing out random decisions that firms have had to treat as quasi-precedents. Industry will welcome Treasury’s package”. I will invite you to respond to that in a moment, but such a comment will give consumers the sense that there is a trade-off. One of those items is the 10-year limit, for example. For some categories, such as pensions or mortgages, it will mean that they apparently will not have those protections. First, how would you respond to the sentiment expressed in Simon’s quote? What would you say on that 10-year thing for consumers?

In terms of the first, my understanding and our ambition through the reforms is to provide a better service and through that to ensure there is confidence from consumers in terms of financial services. Anything that does not speak to that is a concern. We do not set precedent and we are not the regulator. Sometimes people accuse us of being the quasi-regulator because we are the ones who have to take the rules and apply them to individual cases. We want to be more open and transparent about how we are arriving at our decisions so that both parties—we are impartial to both parties involved in the complaint—can understand how we have arrived at that decision, working through the individual facts of the case.

Would you accept at this point, Mr Dipple-Johnstone, that that is the received wisdom of many financial services firms and law firms representing people? They see a decision from the FOS and they think, “We know where this is going to go”. This has caused a lot of frustration.

Yes, firms do share that view with me, which is why we want to be clearer and more transparent about how we have arrived at decisions. To your precedent point, which was within your questionnaire, we do not seek to take or make precedent. We publish our determinations. When people play back to me what they have taken from our determinations, it is sometimes slightly confusing because it is not necessarily what we intended by that particular case. The nuance that we described about the individual facts of the case gets lost.

That is your view. That is not the received wisdom in the marketplace, is it?

We get lobbied all the time, as you would expect. This is a constant refrain from the finance industry.

I just want you to zone in on this trade-off point because the Government have not made these changes because they want it to remain as it is. In the end, there is a trade-off. I get that you do not want to create a headline today that there is going to be a trade-off, but there must be. We are trying to get to the bottom line of these changes. What is the best thing that you can do to tell us about what is going on here?

In terms of these changes, the best thing is about us being more open and transparent about how we have arrived at decisions and applying them more consistently, which is why, for example, we want to produce thematic reviews so that we can share the learning that should be taken from our cases as a theme rather than as individual cases. Turning to your point about the 10-year limit, this is a proposal from the Treasury’s review. It would require Parliament’s consent; it would require primary legislation to take that through. My understanding from the Treasury document is that there is an intent that there should be some categories of complaint that might not fall within the 10-year limit. Exactly as you have said, the kinds of things that we would recommend to be considered as part of that would be things such as pensions, long-term investments and mortgages, where, by the very nature of those products, concerns about them might happen quite late in the day.

Consumer organisations would perhaps say that, if poorly evidenced claims are made, that might say something about the individual’s circumstances and capacity to make a claim. How would you avoid the most vulnerable in society being essentially frozen out from making a legitimate claim from a position of less awareness, language and knowledge, et cetera?

We are doing more as a service and we can do more as a service to raise awareness about the service. There is more that can be done at the point at which consumers get responses from their financial services provider to make it easier to bring your complaint through to the service and to signpost people to the service so that they can come to us. We also have to continue to strive to make it easier to access the service, improve the front door and improve the support we provide to vulnerable consumers.

I have no doubts about your professionalism personally, but if this question about openness and transparency results in individuals not being able to get their case looked at, that is of little comfort—they are not going to be comforted by that assertion. Are you saying that the broad needs of the consumer, as up to this point, will be met with exactly the same outcome, even if there are slight tweaks to the process as has happened so far? What can you say about the consumer endpoint following these changes?

I will say two things. First and foremost, we want to make it easier for those consumers to come through to us. More people might find it easier to come through to the service and have their case looked at and responded to at pace and to the right quality standards. Secondly, we will be able to share more about the cases that we have seen, so that you can hold us to account in terms of our uphold rates and what kinds of issues we have looked at. We can share the learning. People can have their complaint resolved at local stages of the complaints process without having to come through to the ombudsman, so there is that virtuous circle of feedback and learning happening within the overall system.

Would you characterise this as a strengthening of consumers’ rights in any way?

There is a lot of strengthening in things such as the thematic reviews, so being able to take a category of complaints and say, “This is what we have seen. This is how we have looked at them. This is what we think firms ought to do”. We will be able to share that. At the moment, we do it with individual firms on individual cases. It does not cut through at that level. We will be able to produce thematic reviews, as some other ombudsman do. The Parliamentary and Health Service Ombudsman has done great work extrapolating from individual sepsis cases into a national sepsis campaign to improve the quality of healthcare. It is that kind of impact.

It is stopping things downstream from coming to you in the first place.

That is exactly right.

It is quite hard to measure, potentially.

Yes, but it is a benefit for consumers.

If you can measure it, yes. How will you measure it?

That is where the system has to work between the data at the local stages of the complaints process, feedback from the regulator and what we are seeing coming through here.

Who will that data go to? Will it go through the FCA, presumably?

The FCA has a lot of data about the local stages of the complaints process. We have some from our stages. There is always more that we can do to link those two together.

It is important to point out that the ambition on the thematic reviews is to become more joined up so that we can speak with the FCA. They will participate in the thematic reviews as well. You have seen the proposal for a referral mechanism in the proposed legislative package. That is important—it speaks to your point—to how we make sure the regulator and its regulatory responsibilities are clear and defined and how the ombudsman’s service and what we do is clear and defined. If it is a matter for regulatory interpretation, it is the regulator that has the responsibility to do that. Therefore, the decisions that we may take are not imputing a regulatory appetite in that space. I am sure some of the lobbying that you may have received speaks to that space, about the decisions that we may take on an individual case being imputed to apply to a whole range of other cases as well.

Just as a final question, then, you do not think vulnerable consumers or the consumer rights organisations that work and advocate for those individuals have anything to fear from these changes?

No.

Can I just ask a clarifying question to begin with? These thematic reviews that you talk about are distinct from the lead complaint process that might be used for mass redress events.

That is correct, yes.

They have similarities, in that you are going to be looking at a group of complaints together.

They do, yes.

On the lead complaints process, it seems, on the face of it, a sensible idea that we are going to look at these new batch of cases together and make a determination that guides future decisions and gives people more certainty over the long run. Of course, there could be some unintended consequences from this, not least because it might add more time delay into the process. There are fears from some consumer groups that this will be weaponised. People know that, if you delay justice, people drop out of that process very often. What safeguards are you going to have in place to stop companies from using this as a tactic, trying to get rolled into a lead complaints process, kicking it down the road and getting people to give up?

We absolutely do not want that to happen. We are out to consult on a proposal. The kind of things that we might consider putting in place are things such as a time limit on how long we would take to consider a case. If it takes longer than that, then we could release it from that process and deal with the individual cases. It would also require firms to co-operate with us in terms of providing the information and helping us carry out our investigations quickly and effectively.

How will you get them to comply quickly, if it is not in their interests to do so?

In that case, they would not benefit from the lead case approach.

You think it will be in their interests to co-operate with this quickly. You are going to be taking a representative sample. How do you put safeguards in place to make sure it is going to be a representative sample? Nobody gets to look inside the FOS box. The financial firms will have full sight of all the complaints against them, but the individual consumers will not. There is a fear that a selection of cases could be brought together that do not support the strongest consumer case possible.

If that were the case, any subsequent complaints that we get through would be picked up because people would still be able to bring us their complaint. The firm would not benefit from the insight as to how we are looking at that issue. We would raise that with the regulator as part of our reporting criteria.

There is a tension here because you need to deal with each complaint on its own individual merits, but the lead complaints process, almost inherently, is trying to set a precedent for other cases, is it not? How are you going to ensure that a precedent that has been set by the lead complaints process does not overrun another case with more merit?

Yes. Rather than set a precedent, we are trying to provide a guide as to how we might consider that issue. Whether the party is a representative or a firm, it would not be in their interest to select a subset of cases that does not represent the broader cohort that they have, because those consumers could still come to us, irrespective of the lead complaints process. If the case had not been dealt with in line with our advice through the lead complaints process, that would be potentially upheld. It would be self-defeating.

In terms of transparency, how do we check your homework on this? How do we make sure that, once you have chosen a selection of cases and come to a determination, first, it was the right mix and, secondly, it was the right outcome?

We will be reporting on our outcomes as usual, but, as part of the consultation, if people think that we ought to report individually on these cases and show our working, we would be happy to do that.

Even if it is in private correspondence with this Committee, because it is a new process, it would be good to see the workings of some of your first cases that fall under this process.

I always think of the Financial Ombudsman Service as the service that can stand up for my constituents, the little guys, against the big financial services companies. In light of the announcements made by the Government earlier this week, I do have some concerns. I know how extensively the industry has lobbied against the Financial Ombudsman Service. Bearing in mind that all three of you are in interim positions at the moment, it feels to me as though a large amount of your independence is being threatened by these changes. We could all say that we want to see consistency in decisions—I do not have an issue with that—but this Committee needs to be able to monitor how consistent you are being. I would strongly want to see transparency in terms of your decisions. I am worried about some of the things that you are being asked to change, such as the time limits. I am worried about the way in which all three of you, as interims, have not kicked up any fuss or concern about the level of independence that you are having wrenched from you as a result of these changes. Could you confirm that you will continue to publish things and you will be transparent to this Committee? Then specifically around the consumer duty, I believe you have been able to look at complaints around the consumer duty for a few years now. Could you tell us what kind of complaints you are getting from those little guys, our constituents, who have complaints against the consumer duty? The question on the consumer duty is probably to the interim chief ombudsman and the question on independence is to the interim chair.

In terms of the consumer duty, we see a whole range of complaints coming through that involve the consumer duty because it applies to quite a lot of our casework now in terms of what is coming through. On the particular issues that we have been looking at, we are starting to get some issues around fair price and value coming through in terms of whether the product offered a fair value to the consumer. We are continuing to investigate those. We are also looking at some of the communication issues coming through on some of the products. Does the consumer understand the product? Is it the right product for them? Has it been marketed to them appropriately? We are seeing a wide variety of consumer duty issues coming through.

Are you publishing the decisions that you have come to on that?

We continue to publish all our determinations. Through the reforms, we could do specific updates on elements of the consumer duty through a thematic report. We would be able to be more open about that in future.

There were two questions about transparency and independence and a request to ensure that we remain utterly transparent with this Committee. Yes, absolutely. I would see that as a core responsibility, sitting in front of you today and moving forward. If there are particular disclosures—you have mentioned about moving forward with lead case reviews—that would be helpful for the Committee to see in more detail, we would be more than happy to provide those, recognising that some of those, as you have pointed out, are in the early stages, but we will absolutely ensure that you see that moving forward. To the ultimate independence point, I think I answered it earlier, but no, I see the independence of the Financial Ombudsman Service as a fundamental necessary feature of its ongoing activity. On the point about kicking up a fuss, the reform package that is in front of us now does not challenge the ultimate independence of the FOS. We can demonstrate that the independence is there at the heart of the organisation.

Would you be prepared to resign, if you felt your independence was being threatened?

I do not ultimately believe it is at threat.

It may not be you who is in that position when these changes come through in October 2026. It is unlikely to be because of the need for legislative change.

It may not be me, as you say, Chair.

It just feels to me, Chair, that we have a Government dramatically reducing the ability of citizens to have cases seen in front of a jury. I detect a bit of a pattern here. Industry has really got a lot of what it wanted in terms of reducing the independence of the Financial Ombudsman Service and reducing the number of things that it can look at. I am going to land that as a political point and thank the Chair for giving me the floor.

I may be going over old ground, so apologies, but I just want to come back briefly to this lead redress process and follow up on Mr Dean’s questions. I am looking at the flowchart in your consultation from July. The stage 3 investigation says, “Both parties to the complaint will be given the opportunity to contribute their views and evidence”. At a financial organisation they will have lawyers and a whole panoply of experts looking at it. It will be poor old me with my complaint, or one of my constituents. What is happening to even up the balance? Are you going to have some sort of independent advocate for the consumer who sits there? Are you going to have a KC or someone qualified to make sure that the consumer side is put robustly? This will elevate the importance of the complaint. I am quite sure the financial industry will throw their coach and horses at it as a result.

This is where the culture within the organisation is so important because it speaks to our inquisitorial remit as investigators and ombudsmen. What we have been doing for many years is testing and verifying what we have been told. We do not require the complainant to put their terms in exactly the same legalistic or technical language as we sometimes see from the respondent firms. We are levelling the playing field in terms of considering cases. That quality, rigour, ethos and outlook absolutely come through the staff of the service.

For those lead cases, Mr Dipple-Johnstone, if I came along in a year’s time and you are all sat here having dealt with some of them, I would be able to ask how much time your staff spent considering the consumer’s complaint and be able to see, for instance, the average number of hours spent and the seniority, so that I could verify that it matched the thing that would happen on the other side.

We do not record time within the service, but we are absolutely happy to explain on the lead cases and show all of our working out, if that would assist the Committee. I have spent almost all of my working life working in independent complaints handling and investigative bodies. This is not about skewing the pitch one way or the other.

Just to be clear, on providing information to this Committee, we welcome your offer to do that. You are three interim appointments. Is there any way that the system could say, “They may have said that but they were interims; we are not going to do this”? I just want to make it absolutely clear, for the record, that you are speaking for the organisation going forward. Jenny Simmonds: Although James and I are interim in these roles, we are permanent employees of the organisation in terms of our substantive role. It is an unusual situation, but we are committed to making sure we deliver the best service we can for complainants.

Chair, I am just simply going to say yes.

Thank you. We understand that we sometimes need to treat information sensitively. We have never leaked anything and we are not a Committee that would do so. We would hope that we could receive things on those terms, if necessary. We prefer everything to be in public, where it can be. We are very keen to watch this progress. Just on the timetable, Mr Coleman, assuming that you just finish your term and you move on, on the current timetable, it is likely that whoever the next chair is will be appointed under the old regime. What is the term of office normally for a chair appointed substantively?

That is a very good question, to which I do not immediately have the answer. I think it is three or four years.

I am sure, behind the scenes, we can—

I will make sure we verify that.

It would be helpful to know whether there is a plan to appoint your successor. We can also question other people about this.

I do not know, from the top of my head, what the plan is.

We are interested to know whether your successor will be an interim—or it could be you being an interim for longer—or be in for a full term.

I understand entirely the basis of the question.

Similarly, Ms Simmonds, the CEO does not have an appointment period, I do not think. Is that right? If a permanent appointment were made, there would be no time limit. Jenny Simmonds: No.

Recent tenure has been short.

Yes. We have covered that quite a lot in the past. I do not know what Ms Simmonds’s plans are. I am not going to probe you on that in public; that is not fair. Just to be clear, the timetable is dependent on legislation, which we discussed earlier. We will take that up elsewhere.

I just had a quick question. Are any of the panel members a member of a political party?

No. James Dipple-Johnstone and Jenny Simmonds indicated dissent.

There are shaking heads all around. Thank you very much. That drives to the independence position, though of course we know that many good colleagues in political parties can also be independent. In summary, you can understand this Committee’s position. We are watching closely the changes that were announced very suddenly—for us it was suddenly—by the Government on Monday. You are undergoing significant reform as an organisation to modernise the redress system. You have told us that the driver behind the reforms is—I am quoting you—encouraging confidence in financial services. You have heard some of the concerns that we have. As a result of those reforms, some claims, you have told us, will not be upheld that would have been before. You have told us why. You gave us quite a detailed explanation, Mr Dipple-Johnstone. We are wanting to watch that closely. We will be watching this reform very closely. This transparency that you promised us is very welcome. We will want to look particularly at the number of upheld cases and how many people are barred from lodging a complaint. Those are the areas that we really want to watch closely. Dame Harriett made that point particularly as well. A marker to a future Committee is the 10-year limit, if that comes in. It would not be this Committee that would be able to see whether that worked, but I am laying down for Hansard, which is recording it—I hope that a future chair and committee read it back—that the 10-year limit is a very big matter that we have some concerns about. We have seen challenges with the pension system. As constituency MPs and members of Committees, we have all seen cases that have come back many years later, motor finance being one particular one at the moment. That is something that we have a concern about as well. Thank you very much indeed to our witnesses for their time. The transcript of this session will be available on the website uncorrected in the next couple of days. Thank you to our colleagues at Hansard. Thank you to our colleagues at Bow Tie for the broadcasting. Thank you to our witnesses: James Dipple-Johnstone, the interim chief ombudsman; Liam Coleman, the interim chair of the Financial Ombudsman Service; and Jenny Simmonds, the interim chief executive officer of the Financial Ombudsman Service.