What does FOS “acted fairly” mean for your file records?

What is the FOS “acted fairly” reform?

The Financial Ombudsman Service decides complaints against its own “fair and reasonable” test. The government’s reform legislation proposes adapting that test in one direction: where a firm has complied with relevant FCA rules, FOS must find that the firm acted fairly and reasonably. The change sits inside a wider bill on consumer financial services law.

The stated aim is coherence: preventing FOS from operating as a quasi-regulator and aligning ombudsman outcomes with the FCA’s rulebook.

FOS’s published powers state the baseline: if it decides a financial business has not treated a customer fairly, it has the power to set out how the business should put things right. The reform narrows the distance between “the rules were met” and “the firm acted fairly” — and moves the whole argument onto the firm’s records.

The reform ties the fairness finding to rule compliance. (Source: FOS, Our powers and how we resolve complaints)

Why does the “acted fairly” test turn on file records?

Compliance with FCA rules is the trigger for the reformed finding. Compliance is not a state of mind; it is a demonstrable state of the file. Regarding the reformed test, the question shifts from “did the firm behave well” to “can the file show the rules were met”.

FOS decides complaints on the papers the parties supply. A suitability report, a fact-find, a fee agreement, a service log — the file is the ombudsman’s raw material. Where the file is silent, the firm argues from recollection, and recollection carries little weight two or three years after the advice.

Consumer Duty sharpened this. FG22/5, the FCA’s final non-Handbook guidance, frames the Duty around outcomes firms can evidence, and the FCA’s Consumer Duty publications hub collects the source material. The Duty’s monitoring expectations run through management information and record-keeping, which is why the file sits at the centre of both supervision and complaint handling.

Evidence, not intention, is what the Duty asks firms to monitor. (Source: FCA FG22/5)

What must a suitability file show to prove rule compliance?

Regarding suitability records, the reformed test reads the file line by line. COBS 9.2.1R requires a personal recommendation to be suitable for the client, and COBS 9.4.7R sets out what the suitability report must contain, including the reasons why the recommendation meets the client’s needs. COBS 9A.3.3R anchors the same work to the Consumer Duty’s good-outcome standard.

Replacement business raises the bar. Where a recommendation replaces an existing product, FG12/16 governs the replacement process and PROD 3.3 carries the product value assessment, so the file shows the comparison against the arrangement being exited.

The table below maps the records to the rules.

Table: The file records the reformed “acted fairly” test would put under the microscope.

Each row is a compliance question with a documentary answer. A file that answers each row in writing gives the ombudsman a straight path to “complied with the rules”. The file review and suitability hub carries the report-level detail.

Suitability is a written test, and the writing is the evidence. (Source: FCA COBS 9.2.1R)

How do the Consumer Duty outcomes reach the file?

Regarding outcome evidence, PRIN 2A splits the Duty into testable strands. PRIN 2A.4 covers price and value, PRIN 2A.3 covers consumer understanding, PRIN 2A.5 covers consumer support, and PRIN 2A.6 covers ongoing service. Each strand leaves a documentary trace: fair-value comparisons, explanations a client can follow, service logs with dates.

Vulnerability carries its own record. FG21/1, the FCA’s finalised guidance on the fair treatment of vulnerable customers (February 2021), expects firms to identify vulnerability and record the support given, and the FCA’s multi-firm review of vulnerable customers practice (March 2025) tested exactly that evidence.

Ongoing service is the strand most often caught late. TR24/1 para 1.40 addresses ongoing service reviews, and PRIN 2A.6 makes the outcome a Duty matter, so the file shows reviews delivered on schedule and overdue reviews chased rather than quietly dropped. The outcomes monitoring hub maps each strand to the management information that evidences it.

Supervision tests records, not intentions. (Source: FCA FG21/1)

What happens when the file is silent?

Regarding evidential gaps, the reformed test offers no rescue. The statutory route runs through compliance with FCA rules, and compliance that the file cannot show is compliance the firm cannot assert. An illustrative case: the report recommends replacing an existing bond, the file records the recommendation and the new charges, and no comparison against the existing arrangement appears anywhere. PROD 3.3 and FG12/16 make that comparison the substance of the rule, so the silence is the gap.

FOS then works from what exists. Its published powers allow it to set out how a business should put things right once it finds unfair treatment, and a firm arguing fairness in the abstract starts the exchange on the back foot.

The pattern repeats across the Duty: no vulnerability record under FG21/1, no overdue-review trail under TR24/1, no fair-value note under PRIN 2A.4 — each silence converts a compliance question into an open one.

A silent file cannot carry a fairness finding. (Source: FCA FG12/16)

How does file review change before a complaint arrives?

Regarding file sampling, the reform moves the goalposts for pre-complaint review. A rubric built on generic “good practice” ticks tests less than the reformed test will. The practical standard becomes rule-by-rule: does the file show COBS 9.2.1R suitability, PRIN 2A.4 value work, FG21/1 vulnerability handling, TR24/1 service delivery — each with a citation a third party can check.

Scoring tools change the economics. AI can score a report against a rubric and cite the rule behind each Pass, Amber or Fail; the human sign-off stays with the firm, because the judgment remains the firm’s. CP26/23, the FCA’s June 2026 consultation on proportionality, keeps the small-firm dimension of record-keeping expectations in live debate.

The reformed test, in short, rewards the firms whose files already argue their case. The file record stops being back-office hygiene and becomes the firm’s primary defence document.

About the Author: Nick Thorp is the founder of Proven Duty and built AI compliance tooling for UK advice firms. He writes about what Consumer Duty means at file level — evidence, records, outcomes.