Financial Ombudsman Service vs FSCS — Which Applies to Your Claim?

Two separate UK compensation schemes handle financial mis-selling claims: the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS). Understanding which one applies — and in what order — is critical to maximising your recovery.

Quick Answer: Use the Financial Ombudsman Service (FOS) — up to £430,000 — when the firm is still trading and FCA-authorised. Use the Financial Services Compensation Scheme (FSCS) — up to £85,000 — when the firm has been declared 'in default'. Both are free to the consumer. Source: FCA DISP; FSCS scheme rules.

The Key Difference

	Financial Ombudsman Service (FOS)	Financial Services Compensation Scheme (FSCS)
When it applies	Firm still trading and FCA-authorised	Firm has been declared "in default"
Maximum award	Up to £430,000	Up to £85,000 per eligible claimant
Timeline	3–12 months	6–18 months
Cost	Free to consumer	Free to consumer

Which Route Should You Use?

Firm still trading → FOS complaint first (up to £430,000).
Firm declared in default → FSCS application (up to £85,000).
Loss exceeds £85,000 and firm is in default → FSCS for the first £85,000, then court action or FOS claim against any solvent connected parties for the balance.
Parallel claims — where the firm is in default AND you also suffered loss from a trading firm's advice, you may have claims against both.

FOS Time Limits

6 years from the event OR 3 years from when you first became aware of the problem — whichever is later. You must first complain to the firm and allow them 8 weeks to respond.

FSCS Time Limits

No hard limitation period for FSCS applications, but the sooner you apply the better as distribution from failed estates is on a first-come, first-served basis in some cases.

Frequently Asked Questions

Can I use both FOS and FSCS for the same claim?

Not simultaneously for the same loss, but you can claim FSCS compensation for the amount up to £85,000 and pursue further recovery through the courts for losses above that limit.

Does the FOS always award up to £430,000?

No. The FOS awards the amount of your actual loss, up to a maximum of £430,000. It does not award punitive damages, but can add 8% simple interest per year on the loss amount.

What if the firm rejects my FOS complaint?

The FOS makes its own independent decision — the firm's rejection of your complaint is irrelevant to the FOS outcome. If the FOS also rejects the complaint, you can then consider court action.

Do I need to use a solicitor for FOS or FSCS?

No — both schemes are free to consumers and can be pursued directly. Specialist solicitors typically add value on complex claims (large SIPP losses, pension transfer actuarial calculations, or where a firm's initial offer undervalues the loss).

Talk to us

We handle both routes on a No Win No Fee basis. Call 01228 272 395 or start your claim online. See also: how to complain, adviser gone bust.