Complaints, the Financial Ombudsman Service and the Financial Services Compensation Scheme are guaranteed marks in R01 because the rules are precise. The catch is that the detail sits in three different places and candidates blur them together. This is a walk through each in the order a real complaint would travel.
Stage one: the firm
Every firm must have written complaint handling procedures and must give them to a client on request and when it acknowledges a complaint.
| Step | Requirement |
|---|---|
| Simple cases | Resolved by the close of the third business day, confirmed by a summary resolution communication |
| Acknowledgement | Prompt written acknowledgement where the case runs beyond three business days |
| Final response | Within eight weeks, or an explanation of the delay and when a response can be expected |
| Referral rights | The final response must tell the complainant they may refer the case to the Ombudsman within six months |
A firm must also carry out root cause analysis and report complaints data to the regulator twice yearly, and larger firms must publish their complaints data.
Stage two: the Financial Ombudsman Service
The Ombudsman is a free, independent service that resolves disputes on the basis of what is fair and reasonable, taking account of law, regulation, regulator rules and good industry practice. That last phrase matters. The Ombudsman can uphold a complaint where the firm followed the rules but treated the client unfairly.
Who is eligible. Consumers, micro enterprises, small charities and trusts, and small businesses within the defined turnover and staff limits. Large corporates are not eligible, and neither are professional clients in most cases.
Time limits. A complaint must reach the Ombudsman within six months of the firm final response, and within six years of the event or three years from when the complainant knew, or ought reasonably to have known, they had cause to complain.
Outcomes. The Ombudsman can direct a firm to pay compensation for financial loss, distress and inconvenience, and can order the firm to take specific action to put things right. Awards up to the limit are binding on the firm and enforceable through the courts. Anything above the limit is a recommendation only. Importantly, a decision binds the firm but not the complainant, who can still go to court if they reject it. The limits are increased periodically, so check the current figures before your sitting.
Stage three: the Financial Services Compensation Scheme
The FSCS is the safety net when a firm has failed and cannot pay claims against it. Note the difference from the Ombudsman. The Ombudsman decides whether a solvent firm did something wrong. The FSCS pays out when the firm is in default.
| Claim type | Basis of cover |
|---|---|
| Deposits | £120,000 per eligible person per authorised firm from 1 December 2025, with temporary high balance cover of up to £1m for six months in defined circumstances |
| Investments and advice | £85,000 per person per firm |
| Long term insurance, such as life and pensions in payment | 100% of the claim with no upper limit |
| Compulsory insurance, such as motor third party liability | 100% |
| Other general insurance | 90% |
| Mortgage advice and arranging | £85,000 per person per firm |
The deposit limit increased from £85,000 to £120,000 per person per authorised firm from 1 December 2025, so check which figure your syllabus year expects. The investment and mortgage advice limits remain at £85,000 per person per firm.
Three exam points sit inside that table. First, banking licences matter, because two brands sharing one authorisation share one £120,000 limit. Second, the temporary high balance cover of up to £1m lasts for six months only and applies in defined circumstances such as a property sale or inheritance. Third, insurance cover is expressed as a percentage rather than a cash cap, so a question about a large annuity is testing whether you know long term insurance carries unlimited 100% protection.
Where candidates trip up
- Confusing the eight week final response deadline with the six month referral window
- Assuming the Ombudsman can only apply the rule book, when it applies fairness as well
- Treating an Ombudsman decision as binding on the client
- Applying a deposit limit per account rather than per person per authorised firm
- Forgetting that the FSCS requires the firm to be in default
How to revise it
Draw the three stages as a single timeline, add each deadline in order, then add the cover level for each product type at the end. Because the cash limits are reviewed periodically, learn the structure first and refresh the current figures in the week before your exam. The structure earns most of the marks and never changes.