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 £455,000 — 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 £455,000	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 £455,000).
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 Limits

The FSCS limit is £85,000 per person per firm for investment and pension advice claims, and £120,000 for bank deposits where the firm failed on or after 1 December 2025. See which FSCS limit applies to you.

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 £455,000?

No. The FOS awards the amount of your actual loss, up to a maximum of £455,000. 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.