Professional negligence: to complain or claim?

When a professional has let a client down, a common question is whether to pursue a complaint through the professional’s internal complaints process or relevant Ombudsman, or to issue a claim in the courts. Each route has advantages and disadvantages, and the appropriate choice will depend on the circumstances of the case.

Financial services context

This issue frequently arises in financial services disputes. For example, where a regulated financial adviser has provided negligent advice resulting in loss, the client may pursue redress either through the Financial Ombudsman Service (FOS) or by way of court proceedings.

Costs and risk

A key advantage of the FOS, and most Ombudsman schemes, is costs protection. In litigation, the general rule is that the losing party pays a proportion of the winning party’s legal costs. Accordingly, an unsuccessful claimant may face a significant adverse costs liability.

By contrast, a complaint to the FOS does not expose the complainant to the respondent’s legal costs if unsuccessful. Each party bears its own costs, which materially reduces financial risk and may make the Ombudsman route more attractive in appropriate cases.

Process and formality

The FOS process is also more informal than litigation. Matters are typically determined on the papers, without oral evidence or cross-examination. Communication takes place by email, telephone or post, and there is no formal court hearing.

This informality can reduce stress, time and procedural complexity. For many complainants, this makes the Ombudsman route a more accessible and proportionate means of resolving disputes.

Compensation limits

However, Ombudsman schemes are subject to compensation caps. In the case of the FOS, the applicable limit depends on both when the complaint was referred and when the underlying act or omission occurred.

As of 1 April 2026, the maximum award the FOS can require a business to pay is £455,000 for complaints referred to it on or after 1 April 2026 and relating to acts or omissions on or after 1 April 2019.

This is significant. Where losses exceed the applicable cap, a successful complainant may not recover the full extent of their loss through the FOS. While the FOS may recommend that a firm pays more than the limit, it cannot compel payment beyond it.

By contrast, the courts are not subject to such limits, meaning a successful claimant may recover 100% of their proven loss by way of damages.

Approach to decision making

It is also important to consider how each forum determines disputes. The FOS decides cases on what is “fair and reasonable in all the circumstances”. This may depart from a strict application of legal principles.

In contrast, the courts apply established legal rules and evidential standards. This may be advantageous where a claim is legally strong but less suited to a more discretionary assessment.

Conclusion

The choice between complaint and claim requires careful consideration of risk, value, complexity and desired outcome. Early advice can assist in identifying the most appropriate route in light of the specific facts.

We have recovered tens of millions of pounds for clients through the FOS, the courts and, where appropriate, the Financial Services Compensation Scheme, and can advise on the most effective route for your claim. Please contact our team to discuss your options.