Six Months. Eighty Percent. And the Slow Erosion of Trust at the Financial Ombudsman Service.

The Financial Ombudsman Service (FOS) exists for one reason, to provide an independent, fair resolution when a financial firm and its customer cannot agree. That “fair and reasonable” promise is the entire point of the institution.

So when FOS publicly sets an operational target to resolve over 80% of cases within six months, it expects us to applaud the ambition. Who wouldn’t want faster answers?

But here’s where FOS falls into an uncomfortable and repeated trap as speed targets do not exist in a vacuum. They change behaviour, rewire priorities and without ruthless safeguards, they reward closure over competence, throughput over truth, and “done” over “right”.

And if that sounds familiar, it should.

A target is never “just a target”

On paper, “80% within six months” looks like a service standard. In practice, it is something else entirely. It is a a performance management tool that quietly incentivises the wrong outcome.

Because what does a six-month clock actually reward?

• Not the best reasoning.
• Not the most rigorous evidence gathering.
• Not the careful handling of complex matters.
• Not specialist product knowledge.

It rewards moving the taking the file off the desk.

When the dominant organisational message is “hit the number,” people adapt, often through incentives. They triage toward what’s easiest to close. They narrow the scope of what they consider. They avoid reopening lines of enquiry that create delay. They treat ambiguity as inconvenience rather than as a reason to dig deeper.

This isn’t speculation. It’s basic incentive design. When a metric becomes the goal, the work bends to serve the metric, not the public. That is not just a FOS problem. It’s a systems problem. But it becomes catastrophic when the “product” is justice for ordinary people.

Quality doesn’t survive on slogans

FOS will understandably point to internal quality scoring and improvements, whose definition of “quality” counts most? Is it internal dashboard, or is it the lived experience of complainants who feel their case wasn’t properly understood?

We regularly see investigations that feel alarmingly familiar:

• superficial and inadequate fact-finding
• critical documents not meaningfully engaged with
• misunderstood products and processes
• weak reasoning dressed up as certainty
• “template thinking” where nuance is required

Far too often, our opinion is that cases are being handled by people who appear under-prepared, ill-informed and too inexperienced for the complexity and stakes involved.

This is not a personal attack on individual employees. Many will be doing their best inside a machine that pushes speed. The problem is institutional. If you design the system to prioritise quantity over quality, it is exactly what you will achieve.

We’ve been here before: Dispatches, 2018

This is the part that should set alarm bells ringing.

In 2018, Channel 4’s Dispatches aired an undercover investigation focused on FOS. Whatever view you take of the programme, it triggered parliamentary scrutiny and a formal (if inadequate) response from FOS.

A review followed. And crucially, it focused on pressure to deal with caseloads quickly which can distort outcomes and introduce new risks to casework quality.

When FOS doubles down on timeliness targets as a headline ambition without equally loud, equally measurable guarantees on investigative depth and specialist competence, it feels like an institution walking back toward a cliff edge it has already stood on.

The numbers can look good while the service gets worse

Here is the quiet danger of a target like “80% within six months”. It can be achieved while still delivering a degraded service, because the metric doesn’t measure:

• whether evidence was properly tested
• whether the investigator understood the product
• whether the reasoning is coherent and consistent
• whether the outcome reflects what is fair and reasonable
• whether complex cases were given the time and expertise they need

It measures time to closure.

Closure can be manufactured. A system under pressure can “resolve” complaints by narrowing what it is willing to investigate, pushing informal outcomes that don’t truly address the dispute, relying on quick assumptions instead of hard verification, or discouraging escalation because escalation costs time.

If you doubt that institutions can drift into this, look at what happens when public bodies become obsessed with throughput targets in any sector – healthcare, policing, education, benefits administration. The outcome is predictable, the metric improves, the experience deteriorates.

Complaints reducing due to imposed barriers

Perhaps FOS is pushing the target as it predicts, and is seeing, a rapid decrease in the number of complaints it is receiving. It isn’t shy in giving itself a huge pat on the back, but fails to see the reason for the decrease.

FOS imposed fees for representatives to bring complaints on behalf of consumers, claiming that this would stop meritless complaints being escalated to its service. But it failed to consider the impact on vulnerable consumers, many of which seek professional representation.

Representatives are not against costs being paid, but have argued that a fair system would be for FOS to seek costs from a losing party (the lender or the representative). As things stand, both lenders and representatives pay regardless, and FOS’ current position only serves to benefit lenders and put barriers up to justice for the most vulnerable in society, the very people it needs to protect.

A separate but revealing scandal: our FOI request and the silence

Now to transparency, because if FOS wants public confidence, it must accept public scrutiny.

We submitted a Freedom of Information (FOI) request to FOS in November asking, in part, for information about exactly the kind of operational pressures and closure incentives that can undermine casework quality. We were promised a response by 17th December 2025.

Yet we are still waiting. We have chased. We have been ignored. So we will escalate to the Information Commissioner’s Office (ICO).

If the information is harmless and doesn’t suggest consumer harm or service standard issues, why won’t they disclose it? FOS cannot demand trust while refusing transparency

What FOS should measure instead (if it’s serious about public confidence)

If FOS wants to be faster, fine. But it must stop treating speed as the headline virtue over getting it right.

Here are better, harder questions:

• How often are decisions changed because the investigation missed key evidence?
• How often do ombudsman decisions overturn investigator views, and why?
• What proportion of complaints raise “adequacy of investigation” as a concern?
• How is specialist competence assessed and maintained by product area and complexity?
• How many cases are reopened due to internal process failures?
• What is the error rate under independent audit sampling, and what is done about it?

In other words, measure quality like it matters.

Because it does.

Final thought: “fast injustice” is not a public service

FOS is not a call centre. It is not a quota factory. It is not a backlog-clearance operation.

It is supposed to be a cornerstone of consumer protection, a place people go when the power imbalance is real and the stakes are personal.

If FOS turns its culture into “close cases quickly,” it doesn’t just harm individual complainants. It poisons confidence in the entire redress system.

And that is the ultimate cost of targets worshipped in isolation, you can hit 80% in six months and still fail the public.



Re-educating FOS on GAP: “Demands & Needs” Isn’t Optional

There’s a moment in far too many of our GAP insurance cases where the conversation stops being about the consumer’s complaint and starts becoming a tutorial.

Not for the dealership. For the Financial Ombudsman Service (FOS).

We find ourselves having to explain and again that a dealership selling an insurance add-on is not just “retail staff offering a product”. The dealership is acting as an insurance intermediary and it has duties that come with that. In particular, it must carry out an adequate and evidenced demands and needs assessment to confirm the policy was suitable for this customer, this vehicle, and this situation.

History proves that consumers cannot rely on fair treatment of their complaints by lenders and dealerships.

And yet, in case after case, we’re watching FOS investigations drift into a familiar pattern of suggesting that the customer “chose” the product, the paperwork exists, therefore the sale must be fine. It’s déjà vu. This is PPI, but with a different badge on the forecourt.

The “new for old” reality: when GAP becomes redundant on day one

Let’s start with the practical issue that keeps getting missed by the inadequate initial investigation by FOS.

An overwhelming majority of new vehicles insured on fully comprehensive motor insurance are covered by “new for old” replacement in the first 12 months (sometimes longer, depending on insurer and policy terms). Put simply, if there is an accepted total loss claim against the policy the insurer replaces the vehicle with a brand new like-for-like equivalent rather than paying a depreciated cash value.

If that cover is in place, the central sales pitch that “your motor insurer won’t cover the full replacement cost” is demonstrably false. In plain English, the GAP policy is unsuitable on day one, and for a significant period of the period it is designed to cover.

We see this repeatedly:

• A customer buys a new car.
• The dealership sells GAP at the point of sale, often alongside finance.
• The lender and/or dealership insists on the customer having fully comprehensive cover (and often requests evidence of cover).
• The dealership chooses not to check whether “new for old” applies, for how long, or under what conditions.
• The customer later discovers the GAP policy would not have added meaningful value during the first year.

That’s not a technicality. That’s a clear suitability issue.

“Demands & needs” isn’t a tick box exercise

When a dealership sells insurance, the obligation isn’t “make sure the form is signed”. The obligation is to take reasonable steps to ensure the policy is consistent with the customer’s demands and needs, and to provide a statement reflecting that.

A proper demands & needs process, in the context of a new vehicle and a GAP add-on, should include questions like:

• Do you have fully comprehensive cover arranged?
• Does your policy include “new for old” replacement? If so, for how long?
• What’s your likely annual mileage and usage? (Some “new for old” terms vary.)
• Is the vehicle financed? If yes, what are the settlement terms and deposit/negative equity position?
• Does the term of the GAP product match the term of the finance agreement?
• What type of GAP is being sold (RTI, VRI, finance GAP, return to invoice etc.), and what gap is it meant to fill in this customer’s situation?

In most dealership files, the pre-ticked “assessment” is essentially:

• “Customer wants peace of mind.”
• “Customer chose GAP.”
• “Customer signed.”

That’s not a demands & needs assessment. It’s a sales narrative.

The uncomfortable parallel with PPI

The PPI scandal wasn’t only about one product. It was about a system and culture:

• Add-ons sold at the moment of purchase – incentivised by commission (just as GAP is)
• Pressure, bundling, and “it’s part of the deal”
• Weak checks on suitability
• Generic “needs” statements that could apply to anyone
• Paperwork used as a shield instead of evidence of compliance

GAP sold at dealerships often follows the exact same behavioural script. It’s offered at the emotional peak of the buying journey when the customer is committed, financially stretched, and primed to protect the purchase. The pitch is simple.

And when complaints arise, the defence is also familiar; “they agreed”, “they signed”, “they could have read it”.

That’s exactly why demands & needs matter. It is the guardrail that stops the add-on machine from running on autopilot.

Why we’re “re-educating” FOS (and why that should worry everyone)

Let’s first be clear, we are the pioneers in GAP mis-selling claims and FOS is learning (slowly), but it only currently has one investigator looking into GAP complaints and he hasn’t got the required experience or understanding of these sales, nor the undeniable similarities to PPI.

The FOS is supposed to be the backstop, providing informal, fair, consumer-focused, and grounded in how financial services should work in practice, not just what a form says.

But in this area, we see worrying signs that institutional knowledge has faded, and fast. The turnover of employees at FOS has clearly resulted in a loss of experience of how PPI was sold, which in turn has resulted in poor investigations and a lack of understanding.

So we end up having to explain things that should be foundational:

• A dealership can be an insurance intermediary, with regulatory duties.
• Demands & needs is not satisfied by a generic statement (often pre-populated) detached from the customer’s circumstances.
• A GAP sale is unsuitable if the customer’s primary motor policy already provides “new for old” replacement for the relevant period.
• A GAP sale is unsuitable if the term of the cover does not match the term of the finance agreement.
• The existence of documentation isn’t proof of a compliant sales process—especially when the documentation is boilerplate.

Even more concerning is the day-to-day quality issue with investigations that fail to request the relevant evidence. If the seller says “we did a demands & needs assessment”, the next step shouldn’t be to accept that at face value. The next step is to request it and obtain evidence to support it.

• What questions were asked?
• What answers were recorded?
• What training and scripts were used?
• What evidence was requested and obtained?
• What product literature was provided at the time?
• What exclusions and limitations were explained?
• Was “new for old” discussed at all?
• Was product term discussed at all?

If none of that exists, it’s not a minor gap in the file. It’s indicative of a mis-sale.

The minimum expectation of a competent FOS approach must be: ‘if the product may be redundant for a common and foreseeable reason (like “new for old” cover on a new car), the seller should have checked’.

Not as an optional extra. As part of a basic selling responsibly.

What we’re demanding from FOS

This isn’t about being anti-FOS, as much as it may appear. It’s about protecting the credibility of the system and ensuring consistency for consumers.

A better approach would look like this:

• Treat dealership GAP as regulated distribution, not retail upselling.
  Investigations should reflect the responsibilities that come with selling insurance.
• Make demands & needs evidence-based.
  If the seller can’t show what was asked and recorded, don’t assume it happened – look at PPI.
• Handle “new for old” as a standard suitability checkpoint for new vehicles.
  If the seller didn’t check whether it applied, assume ‘new for old’ existed.
• Ensure the policy matches the requirement.
  If the GAP term and finance agreement term is a mismatch, there is a clear suitability red flag.
• Stop using signatures as a substitute for suitability.
  A signed document proves a sale occurred. It does not prove it was appropriate.
• Raise the bar on investigator training and internal guidance.
  These cases shouldn’t depend on whether the consumer (or their representative) happens to educate the investigator.

The basic bottom line

This shouldn’t be a niche argument. It’s the basics of selling insurance fairly.

When a consumer buys a new car, and their comprehensive insurance is highly likely to include “new for old” in the first year, selling GAP without checking that reality is not a harmless oversight.

And when the consumer complains, they should not have to become the trainer in the room.

If the FOS has lost the muscle memory from the PPI era—about add-on sales, suitability, and the misuse of paperwork as a shield then we’ll keep doing what we’re doing by rebuilding that understanding case by case.

But we shouldn’t have to.