Professional indemnity explained

FOS reform and a 10-year time limit: what it means for advisers' PI

Reviewed by the Apex broking team · Last reviewed 2026-10-31

The FOS 10-year time limit is a planned cut-off on complaints to the Financial Ombudsman Service about events more than 10 years old. It matters to advisers because the length of their Ombudsman exposure drives run-off cover, PI pricing and how buyers value advice firms.

Part of: Professional indemnity insurance

In short

In its response to the review of the Financial Ombudsman Service, first published on 30 March 2026, HM Treasury said it will legislate for an 10-year time limit on complaints, with limited exceptions to be set by the FCA, mainly for longer-term products such as pensions. It also plans to require the Ombudsman to find a firm acted fairly and reasonably where it met FCA rules. None of this is law yet. Until it is, the six-year and three-year rules, with no longstop, still apply.

What has actually been decided?

HM Treasury's consultation response on the review of the Financial Ombudsman Service was first published on 30 March 2026 and updated on 20 May 2026. The key points for advisers are:

A 10-year time limit. The government will legislate to introduce an 10-year limit on bringing complaints to the Ombudsman.
Exceptions. The FCA will set limited exceptions, mainly for longer-term products such as pensions, where problems may take longer to surface. It will publish proposals in due course.
Fair and reasonable where rules were met. Where a firm met its FCA rule obligations, the Ombudsman will be required to find it acted fairly and reasonably for that element of the complaint, while still considering all the circumstances.
Wider implications referrals. The Ombudsman will refer issues with potential wider implications to the FCA, which will have a proposed 30-day limit to respond.
Timing. These changes need primary legislation, which the government will take forward when Parliamentary time allows. No date has been given.

Today's rules versus the planned position

Issue	Current rules (DISP 2.8)	Planned reform
Basic limit	Six years from the event	Unchanged as far as announced
Late awareness	Three years from when the client knew or ought reasonably to have known	Subject to an overall 10-year cut-off
Longstop	None; the 15-year longstop does not apply to the Ombudsman	Absolute 10-year limit, with FCA exceptions
Pensions and long-term products	Same rules as other products	Likely to be exceptions; detail awaited
Status	In force	Needs primary legislation

The current rules are explained in the Ombudsman's time limits guidance and on our FOS time limits page. Court claims are separate: many negligence claims are subject to the 15-year longstop in section 14B of the Limitation Act 1980, which the reform does not change.

Other parts of the reform package

The time limit is the headline, but the Treasury response contains other changes that affect how complaints, and therefore PI claims, develop.

Mass redress events. The FCA will be able to direct firms and the Ombudsman to pause complaints, and to direct the Ombudsman to return complaints to firms where a redress scheme applies. The test for a section 404 redress scheme is to be simplified.
Governance. A Chief Ombudsman will have overall responsibility for determinations, with appointment subject to HM Treasury approval, and the Chair will become a government appointment.
Thematic reports. The FCA and the Ombudsman will publish regular joint thematic reports. Individual decisions will still be published but are not intended to set precedent.
Near-term process changes. The FCA and the Ombudsman have published a joint paper proposing changes to DISP 3, including a registration phase for complaints and amended dismissal grounds.
No merger. The government will not make the Ombudsman a subsidiary of the FCA.

For PI, the redress scheme powers matter. Policies treat aggregation and redress schemes differently, and some wordings restrict cover for regulator-led reviews. Check how yours responds before a scheme is announced, not after.

What it could mean for PI and run-off

A shorter maximum tail should, in principle, make the Ombudsman exposure on closed books more predictable. That may, over time, affect how insurers approach run-off cover for advisers and how long a period firms choose. But three points limit the immediate effect.

It is not law. Insurers will price on the current rules until legislation is passed and commencement and transitional provisions are known.
Pensions may be excepted. Pension transfer, drawdown and SIPP advice are often the largest long-tail exposures in adviser PI. If they fall within the exceptions, the practical change for many IFAs may be smaller than the headline suggests.
Courts are unaffected. Clients outside Ombudsman jurisdiction, or above its award limits, can still sue within the Limitation Act periods.

The fair and reasonable change may help firms that can show they followed FCA rules at the time. Good file records and evidence of compliance will matter more, not less.

Consolidators, sales and retiring advisers

Buyers of advice firms routinely look at historic liability when deciding between a share purchase and a client bank purchase. A future 10-year limit could change that calculation for some books, but until the exceptions and transitional rules are published, buyers and sellers are likely to keep relying on warranties, indemnities, retained consideration and run-off. Our pages on selling a practice and run-off when you retire or sell cover the insurance side.

Illustrative examples

These examples are illustrative only and assume the law as it stands today.

Example 1: investment advice from 2013

A client complains in 2026 about a 2013 portfolio recommendation, saying they only recently realised the risk level. Under current rules the Ombudsman may hear it if made within three years of awareness. Under a future 10-year limit, a similar complaint might be out of time unless an exception applies.

Example 2: pension transfer

A 2014 pension transfer complaint arrives after the client reviews retirement income. Even after reform, this kind of long-term product is the area the FCA is expected to consider for exceptions, so run-off for pension business remains important.

Example 3: complaint paused for a redress scheme

Once the new powers are in force, an adviser's complaint about a product type subject to an FCA redress scheme could be paused and returned to the firm. Whether the firm's PI responds to redress calculated under a scheme, rather than an Ombudsman award, depends on the policy wording.

Common misunderstandings and what to do now

"The 10-year limit already applies." It does not. Current DISP rules remain in force.
"Run-off can stop at 10 years." Not yet, and possibly not for pension business.
"Following FCA rules means no complaints." The Ombudsman will still look at all the circumstances, and complaints not covered by FCA rules remain fair and reasonable decisions.

Practical steps: keep advice files and suitability evidence accessible, notify circumstances promptly, review your limit of indemnity against the Ombudsman's award limit, and discuss run-off options before you sell or retire. Our IFA PI guide has more. Apex arranges PI and run-off cover for advisers; a broker reads every enquiry.

Sources

Frequently asked

Is there a 10-year time limit for Financial Ombudsman complaints now?

No. HM Treasury has said it will legislate for an 10-year limit, but this needs primary legislation and no date has been set. Until then, the current rules apply: six years from the event or three years from awareness, with no 15-year longstop.

Will the 10-year limit apply to pension transfer complaints?

Not necessarily. The government said the FCA will set limited exceptions, mainly for longer-term products such as pensions. The FCA's proposals have not yet been published, so advisers with pension business should assume a long tail for now.

Should I buy less run-off cover because of the FOS reforms?

It is too early to rely on the reforms. They are not law, transitional rules are unknown, and pension exceptions are expected. Court claims also remain possible. Discuss the run-off period with your broker on the basis of the rules in force today.

What does the fair and reasonable change mean for advisers?

Where a firm met its FCA rule obligations, the Ombudsman will be required to find it acted fairly and reasonably for that element of the complaint. It will still consider all the circumstances, so good records showing how rules were followed become more valuable.

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Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.