FOS jurisdiction over claims | UK Insurance Wiki

Category: Claims handling · Reviewed by Mark Fox, Broker · Renewals · Last reviewed 2026-06-11

The Financial Ombudsman Service has jurisdiction over complaints from eligible complainants about regulated firms’ handling of insurance claims — applying a fair-and-reasonable test that can produce outcomes broader than strict legal entitlement.

Definition

FOS is the statutory dispute-resolution scheme established under the Financial Services and Markets Act 2000 for resolving disputes between consumers (and small businesses) and regulated firms. Its claims-handling jurisdiction is one of the largest categories of work it does — well over 100,000 insurance complaints are referred each year.

FOS jurisdiction is shaped by DISP 2 and FSMA. It applies to “eligible complainants” against “respondents” in relation to defined activities. Claims complaints fall within scope where the underlying insurance is a regulated product and the complainant meets the eligibility test.

Legal / Regulatory basis

The statutory basis is FSMA Part XVI and the implementing rules in DISP. Key provisions:

• DISP 2.7: who is an eligible complainant — primarily consumers, micro-enterprises (now defined as small businesses with turnover under £6.5m and fewer than 50 employees), charities and trustees of trusts within asset thresholds.
• DISP 3.6: the fair-and-reasonable test — the Ombudsman determines complaints by reference to what is fair and reasonable in the circumstances, taking into account law, regulations, regulators’ guidance and good industry practice.
• DISP 3.7: the Ombudsman’s powers, including direction of redress and monetary awards.
• The compulsory jurisdiction monetary limit (currently £415,000 for complaints about events on or after 1 April 2024, with periodic adjustment for inflation; firms must check the current limit).

The fair-and-reasonable test is broader than the strict legal test. The FOS can require outcomes that a court would not order — for example, distress and inconvenience compensation in commercial contexts, broader interpretation of policy terms in the consumer’s favour, or relief from technical defences.

The FOS’s decisions are not binding precedents but the FOS’s published approach and decision database are highly influential.

How it works in practice

A complainant who has received an unsatisfactory final response (or no response within 8 weeks) can refer to the FOS within 6 months. Time limits also apply to the underlying matter — 6 years from the event or 3 years from when the complainant knew or ought to have known of the cause.

The FOS process:

• Application to FOS by the complainant.
• Investigation by a FOS investigator (sometimes called an Adjudicator), gathering evidence from both sides.
• Provisional view issued — the FOS’s preliminary conclusion.
• Either party can accept or reject the provisional view.
• If rejected, the matter goes to a final decision by an Ombudsman.
• The Ombudsman’s final decision is binding on the firm if accepted by the complainant; the complainant retains the right to litigate if they reject.

The FOS is free to the complainant. Firms pay case fees (a defined fee per case above an exempt threshold).

For claims handling, the typical FOS interventions include:

• Direction to pay the substantive claim (often the principal issue).
• Direction to recalculate quantum.
• Direction to pay interest (typically at 8% simple).
• Direction to pay distress and inconvenience compensation.
• Direction to make procedural improvements (rare in individual decisions but common in thematic communications).

The FOS publishes decision summaries and full anonymised decisions. The FOS’s approach to claims handling is publicly documented through its newsletters, knowledge base and published decisions.

For insurers, the FOS decision is binding once accepted by the complainant. There is no further internal review; only judicial review of the FOS process (rarely successful) is available.

Common variations

“Eligible consumer” complaints — the largest category; complainants are individuals.

“Micro-enterprise” complaints — small business complainants meeting the eligibility test.

“Voluntary jurisdiction” — firms that have opted into FOS jurisdiction for matters that would not otherwise fall within compulsory jurisdiction. Rare in insurance.

“Out-of-jurisdiction” complaints — the FOS may refuse to consider a complaint on jurisdictional grounds (eligibility, time, subject matter); the complainant retains other rights.

“Group complaints” — multiple complaints arising from the same systemic issue, often coordinated by FOS.

Example

A consumer policyholder’s £18,000 home contents claim is partially rejected by the insurer on the basis that some items were “older than 5 years” and so subject to an aged-items reduction in the policy schedule. The policyholder considers the reduction excessive and refers to FOS.

The FOS investigator:

• Reviews the policy wording and finds the aged-items provision is in the policy but is poorly explained in the customer-facing materials.
• Considers whether the application of the provision was fair given the way it was communicated at sale and renewal.
• Concludes the application is technically permitted by the wording but unreasonably harsh given the imprecise communication and the relatively old items being affected.

Provisional view: the insurer should pay £14,500 (an increase of £6,200 on the original offer) plus interest at 8% from the date the claim was made.

The insurer accepts the provisional view. The complainant accepts. The insurer pays. The FOS decision is logged in the firm’s complaints MI and the insurer reviews the communication of the aged-items provision; the customer-facing materials are revised at next renewal.

See also

• Complaints handling DISP
• Final response letter
• FSCS claims procedure
• Bad faith claims handling
• Vexatious refusal

References

1. Financial Services and Markets Act 2000, Part XVI.
2. FCA Handbook, DISP 2 and DISP 3.
3. FOS Annual Review (current edition).

Last reviewed

By Matt Bartlett, Director, on 2026-06-11. Next review: 2026-12-11.

This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-11. Apex Insurance Brokers Limited, FCA FRN 724952, Companies House 07014570. Not regulated advice — consult your broker on your specific position.