FCA chief pushes back on ‘vocalʼ industry critics of ombudsman decisions

Nikhil Rathi, chief executive of the UK Financial Conduct Authority (FCA), reminded firms that complain to lawmakers about decisions by the Financial Ombudsman Service (FOS) they could challenge any such decision in court.

“Firms have rights,” Rathi told members of the Treasury Committee during an evidence season on the regulatorʼs activities on June 10. “If they feel a FOS decision is inappropriate, or it has overstepped the law, they can take it to court.”

He added that some firms who were “perhaps the most vocal about alleged retrospectivity” were sometimes “the most reticent” about testing their view in court”.

Not forthcoming

Rathi doubled-down on his criticism of “vocal critics” in response to a question from committee member John Glen MP, a former economic secretary to HM Treasury. Glen asked Rathi what he would say to CEOs who had told the committee they were hesitant to offer their customers innovative products or targeted support, for fear of retrospective legal action from the regulator in three or five years’ time.

“First of all, I would query that hypothesis about retrospective action,” Rathi said. “Where firms have made this claim, if they really believe the law is being applied retrospectively they are entitled to challenge that in court. And I would just repeat that some of the firms who have been most vocal [in public] about this have not been the most forthcoming when going to court and arguing their case.”

Lloyds CEO

Charlie Nunn, chief executive of Lloyds Bank, has repeatedly questioned the retrospective nature of the FOS decisions — most recently at an evidence session of the Treasury Committee last month.

In January 2024, Lloyds-owned lender Black Horse Financial Services was one of two firms handed decisions by the ombudsman involving the use of discretionary commission arrangements (DCAs) in motor finance sold to consumers, the other being Barclays.

These decisions triggered the FCA review on the use of DCAs, which has left the industry facing a multi-billion pound redress bill. Lloyds has never challenged the FOS decision in the courts.

In contrast, Barclays challenged the FOS DCA decision in favour of its’ customer, taking judicial review. Barclays failed in this effort to overturn the FOS judgment in December 2024, and the Court of Appeal is set to hear a challenge to that High Court decision next month.

Lloyds neither responded to a request for comment today, nor previously to requests on why it has never challenged the FOS Black Horse decision.