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FCA and FOS publish a new Memorandum of Understanding 

Jul 16, 2025 | FCA and FOS

Link(s):Memorandum of Understanding between the FCA and the scheme operator, the Financial Ombudsman Service

Context

The FCA and FOS, alongside the announcements in relation to modernising the redress system and FOS interest rate application changes, have published an updated Memorandum of Understanding (MoU).  The updated MoU seems to be a clear message to FOS (in light of the motor finance commissions case decisions) that FOS should not make decisions which might have wide-ranging implications without first consulting the FCA in relation to its interpretation of its rules.

Key points to note and next actions

  • The MoU retains important commentary on the roles of the FCA and FOS, the statutory responsibilities of the FCA and FOS, governance, cooperation, and information sharing.
  • In relation to cooperation, the MoU stresses the particular importance of cooperation in scenarios where decisions of the FCA or FOS may have significant impacts upon users of financial services and firms in the market (e.g., FCA decisions when contemplating or carrying out supervisory or regulatory action, FOS decisions when it receives a significant number of cases concerning the same or similar issues, or where the FOS decisions “…may affect a significant proportion of firms in a sector of financial services”.
  • The FCA and FOS will cooperate where either organisation identifies an issue with wider implications (e.g., something that affects a large number of consumers where there is a significant amount of redress at stake).  They intend to:
  • consult one another at an early stage;
  • engage and communicate at appropriate levels of seniority, to discuss matters of mutual interest;
  • ensure that FOS seeks views from the FCA on the interpretation of its rules and how redress could potentially be assessed in advance of issuing a final determination, and that the FCA provides a timely response;
  • consider whether the FCA should publish its advice to FOS to clarify the FCA’s expectations on its rules; and
  • ensure that the FCA regularly briefs FOS on its work programme, issues of concern and areas of interest, to facilitate the provision of data and views it might consider useful to consider policy developments.