New research has shown that the Financial Ombudsman Service (FOS) is inflating the rate that it reports complaints to it as successful.
Academics from The University of Warwick have analysed judgements by the Ombudsman and found that many cases were recorded as successful, even when the complaint was essentially rejected and either no additional compensation or tokenistic compensation was awarded.
The research, which reviewed over 100 cases reviewed from multiple Ombudsmen at the FOS, suggests that the FOS is inflating its published uphold rate, misleadingly claiming a 37% success rate for consumers in 2023-24.
However, the study estimates the figure for genuinely successful complaints to be much lower, at around 24%, revealing inflationary practices in how cases are classified.
The study revealed that:
33%-34% of complaints recorded as 'upheld' were considered inflationary, in the sense that the complaint was in reality substantially rejected.
For banking and payments complaints, the inflationary rate rose as high as 48%.
In the case of one Ombudsman, the inflationary rate appeared to be 96%-99%, with almost no genuine upholds.
The Ombudsman appears to have been aware that cases where no additional compensation was awarded should have been recorded as not upheld, even as he was recording some of these cases as upheld.
One academic who led the study said:
"Our conclusion is that there is clear evidence that the FOS is deliberately inflating the success rate that complainants can expect by reporting cases as upheld, even when the complaint is essentially rejected and either no additional compensation or tokenistic compensation is awarded.
"Our findings suggest a significant gap between the FOS's reported figures and the actual outcomes experienced by complainants. This could undermine public trust in an essential consumer protection body."
"In the case of some Ombudsmen it seems that nearly all of their upholds are of this type, meaning that the chance of genuinely successful outcome if a complaint is referred to these Ombudsmen is close to 0%."
The study examined a sample of cases and found that a significant portion were marked as "upheld," despite minimal compensation awarded or outright rejection of substantive claims.
In other cases categorised as "upheld", consumers received only token amounts (e.g., £50-£300) for "distress" that was completely disconnected from the case for substantial financial redress that the complaint had requested.
The research team identified what they described as "concerning practices" in Ombudsman judgements and how they are recorded, which they suggest could reflect institutional pressure to artificially inflate uphold rates, arising from the FOS being funded by the financial institutions against which the complaints are made. They argue this misrepresents the true likelihood of a favourable outcome for consumers and echoes reports on sites like TrustPilot, where the FOS has received an exceptionally low score of 1.3/5 and is frequently accused of bias and unfairness.
