Financial Services Bill: What It Changes for Complaints

The Bill also abolishes the Payment Systems Regulator and transfers its functions to the Financial Conduct Authority.

The fair and reasonable test

The fair and reasonable test is the standard the Financial Ombudsman Service uses to decide what outcome is fair in the circumstances of a complaint. The Bill would adapt this test so that it is met where a firm has complied with relevant FCA rules. Peers debated an alternative formulation of the test, put forward by Lord Sharkey, which was rejected by 144 votes to 59.

Four amendments were voted on but disagreed to during report stage. These covered consumer credit protections, access to affordable credit, the Financial Ombudsman fair and reasonable test, and fraud reimbursement with technology company liability.

What a 10-year longstop means for older complaints

A 10-year longstop would set a limit on how far back a complaint can reach when it is brought to the Financial Ombudsman Service. For someone with an older complaint, this would mean that a matter falling outside that period could no longer be brought to the service.

The change forms part of the Bill as introduced. It has not taken effect, so the current rules on time limits still govern complaints made now.

Mass redress events and the FCA's proposed role

Mass redress events are situations where a large number of consumers may be owed redress for the same underlying issue. The Bill sets out a proposed role for the FCA in relation to these events.

This sits alongside the wider changes to the ombudsman framework, including the proposed longstop and the adaptation of the fair and reasonable test.

What happened at report stage in the Lords

The Bill started in the House of Lords, where report stage ran on 8 and 9 September 2026. Day one saw over 30 amendments debated and five divisions.

• Peers voted to remove the clause allowing HM Treasury to amend legislation on access to banking services.
• Four amendments were voted on but disagreed to, covering consumer credit protections, access to affordable credit, the Financial Ombudsman fair and reasonable test, and fraud reimbursement with technology company liability.
• Lord Sharkey's alternative formulation of the fair and reasonable test was rejected by 144 votes to 59.

Separate Financial Ombudsman Service dismissal-ground changes take effect on 1 October 2026.

What happens next

The Bill would next go to third reading in the Lords, then to the Commons, after which the Bill may pass between both Houses until identical wording is agreed. None of this is law yet, and current Financial Ombudsman Service rules still apply.

Frequently asked questions

Is the Financial Services and Markets Bill law yet?

No. The Bill has not passed or received Royal Assent. It is still going through Parliament, and current Financial Ombudsman Service rules still apply.

What is the fair and reasonable test now?

It is the standard the Financial Ombudsman Service uses to decide what outcome is fair in the circumstances of a complaint. The Bill would adapt it so it is met where a firm has complied with relevant FCA rules.

What would a 10-year longstop do?

It would introduce a 10-year limit for bringing a complaint to the Financial Ombudsman Service. This has not taken effect.

What are mass redress events?

They are situations where a large number of consumers may be owed redress for the same underlying issue. The Bill sets out a proposed role for the FCA in relation to them.

What happened to the amendments at report stage?

Peers voted to remove the clause allowing HM Treasury to amend legislation on access to banking services. Four amendments were voted on but disagreed to, covering consumer credit protections, access to affordable credit, the Financial Ombudsman fair and reasonable test, and fraud reimbursement with technology company liability.

When do the separate FOS dismissal-ground changes take effect?

Separate Financial Ombudsman Service dismissal-ground changes take effect on 1 October 2026.