📈 A Surge in FOS Complaints: What the Data Really Reveals About the Motor Finance Scandal

The Financial Ombudsman Service (FOS) has reported a significant increase in complaints in the year to 31st March 2025, a spike that many experts believe is directly tied to the controversial reforms due to take effect from 1st April 2025—chief among them, the introduction of fees charged to representative firms for escalating consumer complaints.

This development is not only raising eyebrows across the claims and financial advice sectors, but it is also provoking deep concern about access to justice for vulnerable consumers. Beneath the surface of this reform lies a troubling strategy: to stifle redress for motor finance mis-selling by limiting who can afford to fight on behalf of consumers.

💰 A Fee That Hits the Wrong People

From 1st April 2025, representative firms—such as claims management companies and legal representatives—will be charged a case fee by the Financial Ombudsman Service for each complaint they bring on behalf of a consumer.

While FOS insists the measure is aimed at discouraging ‘meritless’ claims, in reality it places a barrier in front of vulnerable and financially distressed consumers, who overwhelmingly rely on professional representation to navigate the often opaque and complex complaints process.

It is accepted that FOS needs to recoup costs for investigating escalated complaints, but the most sensible approach to encourage fair outcomes would be to charge the losing party, whether that be the representative firm or the lender.

For many people impacted by motor finance mis-selling, they rely upon representation by a trusted firm with legal or financial expertise. Charging these firms per case discourages escalation, particularly for relatively lower-value claims that will inevitably disproportionately affect those already struggling with debt or financial exclusion.

🔍 What Else Is Being Done to Suppress Claims?

This new fee is not happening in isolation. It is part of a wider pattern of systemic changes that appear designed to suppress the rising tide of motor finance mis-selling complaints. Other concerning developments include:

1. 📉 A Proposed Reduction in Compensatory Interest

The Financial Conduct Authority (FCA) has floated proposals to cut the 8% compensatory interest typically awarded in redress cases. This would reduce the final compensation paid to consumers—most of whom have waited years for justice—ultimately saving lenders money at the expense of fairness.

2. ⚖️ The FCA Siding with Lenders at the Supreme Court

Perhaps most concerning of all is the FCA’s position in the Supreme Court, where it has aligned itself with lenders, arguing that disclosure of commission was not required, contrary to its own existing rules. This stance is seen by many as a betrayal of its core mission: to protect consumers from financial harm.

By backing the argument that lenders owed no duty of care, and that dealership incentives did not need to be disclosed, the FCA is weakening the very consumer protections that the Ombudsman is designed to uphold.

📉 A Predictable Drop: April 2025 and Beyond

The surge in complaints up to March 31st, 2025 should not be seen as a statistical anomaly—it is a pre-emptive rush by representative firms to submit legitimate complaints before the fees take effect.

From April 2025 onwards, there will be a sharp drop in complaints being escalated to the Ombudsman. This will not reflect a resolution of wrongdoing or a drop in mis-selling.

Instead, it will prove—beyond doubt—that the introduction of fees is suppressing access to justice, protecting banks and lenders, and discouraging legitimate complaints by shielding the motor finance sector from public accountability.

🔚 Conclusion: Who Benefits, and Who Pays?

The question we must ask is simple: Who benefits from these changes?

• Not the consumers, many of whom were unknowingly sold finance on inflated terms.
• Not the public, who depend on a fair, accessible complaints system.
• Not the law, which is being gradually bent to protect financial giants over individuals.

The only winners here are the lenders and banks who have the most to lose from mass redress—and it appears they are now being shielded by a combination of regulatory, judicial, and procedural changes.

As these developments unfold, it’s crucial that consumers, journalists, and campaigners continue to hold the system to account. Silence may be what the industry hopes for next—but justice demands otherwise.

YOUR MONEY CLAIM