A coalition of consumer groups and charities has called on the government to reconsider proposed reforms to the Financial Ombudsman Service (FOS), warning that the changes could make it harder for consumers to access free and independent financial redress.

The coalition, led by Which?, includes organisations such as MoneySavingExpert, Citizens Advice, Age UK, StepChange and Fairer Finance. The group argues that proposals in the Financial Services and Markets Bill could restrict access to compensation for people involved in disputes with banks, insurers and other financial services firms.

The organisations also point to concerns raised by the Financial Conduct Authority (FCA), which has warned that parts of the proposals could "gum up the system" and undermine the ombudsman's independence.

The FOS provides consumers with a free alternative to court action when they cannot resolve complaints directly with a financial services provider. Its decisions are binding on firms, allowing consumers to secure compensation or other remedies without legal proceedings.

The coalition argued that the reforms would introduce a more complex complaints process and make it more difficult for consumers to obtain redress. It says changes to the way the FOS deals with complaints could replace its current fairness-based approach with one that initially favours firms' compliance with regulatory rules.

The groups also oppose proposals that would require the FOS to refer ambiguous regulatory questions to the FCA before reaching a decision. They argue this would slow complaint handling and add unnecessary bureaucracy.

In a joint statement, the coalition urged the government to rethink the reforms, arguing that they risk restricting and delaying access to "timely, independent and impartial" redress at a time when many households continue to face cost-of-living pressures.

The groups also raised concerns about a potential two-tier system for complaints relating to events before the FCA's Consumer Duty came into force in July 2023. They argue that consumers with older complaints could receive less favourable outcomes if firms complied with existing rules but failed to meet the higher standards introduced under the Consumer Duty.

Rocio Concha, director of policy and advocacy at Which?, said the ombudsman provides "an essential lifeline" for consumers facing disputes with financial firms.

"When many households are already stretched to breaking point, introducing reforms that risk making it slower and more challenging for people to access redress sends a chilling message: that when powerful institutions make costly mistakes, ordinary people will be left to pick up the pieces," she said.

The Financial Services and Markets Bill is currently progressing through Parliament.

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