Barclays v the Financial Ombudsman Service: Why Barclays Is Doomed to Fail at the April 2025 Hearing

On 1st April 2025, the financial world will witness a pivotal legal confrontation: Barclays v the Financial Ombudsman Service (FOS). The case is attracting considerable attention as it represents one of the most direct challenges to the authority and decision-making power of the FOS in the context of motor finance mis-selling complaints.

But make no mistake—Barclays is facing an uphill battle, and here’s why their legal challenge is almost certainly doomed to fail.

1. The Context: Motor Finance Mis-Selling & Commission Non-Disclosure

At the heart of the matter is the systemic practice of paying hidden commissions to motor dealerships. The Financial Conduct Authority (FCA) has already confirmed that an estimated 40% of motor finance agreements involved discretionary commission arrangements (DCAs)—a structure that incentivised dealerships to inflate interest rates.

The Financial Ombudsman Service has found against Barclays in January 2024, correctly stating that non-disclosure of commission breaches principles of fair treatment and transparency, leading to successful compensation awards.

Barclays, as a major motor finance provider, is seeking to overturn the FOS’s jurisdiction or reasoning. But their challenge is built on very shaky foundations.

2. The Legal Framework Supports the Ombudsman

Under the Financial Services and Markets Act 2000 (FSMA), the FOS is given broad discretion to make decisions based not solely on the letter of the law but on what is “fair and reasonable in all the circumstances.”

This unique standard of review is something Barclays cannot easily sidestep. Courts have consistently upheld the independence of the Ombudsman and confirmed that it is not a court of law, but a mechanism for consumer redress that operates outside of traditional litigation standards.

In short, Barclays is trying to use legal technicalities to defeat a process that isn’t designed to be constrained by such technicalities.

3. Judicial Precedent Is Not on Barclays’ Side

Courts have long supported the autonomy of the Ombudsman to reach decisions that protect consumers, even when such decisions diverge from how a court might rule. Past challenges to the FOS have rarely succeeded, particularly when they rely on claims of legal error rather than procedural unfairness.

With potentially millions of complaints pending, the judiciary is unlikely to sympathise with what could be interpreted as a tactical attempt to delay redress or undermine a public body acting within its statutory powers.

4. Public and Regulatory Pressure

The broader environment is one of increasing scrutiny of financial institutions and stronger support for consumer protection. The FCA’s pause on motor finance complaints until December 2025 is temporary, and a wave of claims is expected to follow.

Barclays pursuing this case, at a time when consumers are demanding accountability, may backfire. The media narrative is already painting the bank as attempting to dodge responsibility, and a loss in court will only strengthen that image.

5. Why the Outcome Matters

If Barclays fails in its attempt to challenge the Ombudsman, it will send a powerful message to other finance providers: the era of non-disclosure and profit-driven commission models is over.

And with an average redress expected to be approximately £1,500 per successful DCA complaint, the financial implications are enormous.

Conclusion: A Losing Battle in the Making

Barclays may have deep pockets and skilled legal teams, but in this fight, the strength of the law, the principles of fairness, and the tide of public opinion are all against them. Their 1st April 2025 hearing could mark the beginning of the end for corporate resistance to consumer justice in the motor finance sector.

Barclays isn’t just challenging the Ombudsman. They’re challenging the very notion that fairness should triumph over fine print.

And that is a fight they are bound to lose.

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