Chancellor John Healey has thrown his weight behind the government's financial services bill, insisting it will give consumers a "clear set of standards" and avoid "confusion and inconsistency" — despite warnings from consumer groups that the changes could shut people out of free redress.

The bill, part of the package introduced in Sir Keir Starmer's King's Speech, is the City's vehicle for exploiting post-Brexit regulatory freedoms. It makes three concrete changes to how financial complaints work.

What does the bill actually change?

First, it puts a time limit of 10 years on complaints to the Financial Ombudsman Service (FOS), the free body that rules on disputes between consumers and financial firms.

Second, it introduces a new fairness test. If a firm can prove it followed the watchdog's rules, the ombudsman must assume it acted fairly — even if the customer believes they got a bad deal.

Third, where a case raises genuine ambiguity, it must be referred to the Financial Conduct Authority (FCA), the UK's financial regulator, rather than settled case by case.

Healey, speaking as the bill faced parliamentary scrutiny, rejected the charge that it tilts the system toward banks and insurers. The assertion that the bill acts as though "the firm is always right is incorrect," he said.

Who is pushing back?

Treasury committee chair Meg Hillier offered a sharper framing. The bill, she said, could be seen as "moving the pendulum more towards the financial services sector and further from regulation to support consumers."

Consumer champions have gone further still. Fairer Finance, Which? and Martin Lewis' Money Saving Expert have all warned that consumers could be locked out of free, independent redress because of the changes in the bill.

Their concern is mechanical, not rhetorical. The 10-year limit plus the new fairness test narrows two of the main routes customers currently have when a product misfires. Strip those away, they argue, and the ombudsman becomes a narrower instrument.

The government's counter-argument is consistency: firms that follow the rulebook should not face ombudsman decisions that second-guess compliance after the fact.

Why does this matter for Brexit freedoms?

The City has hailed the King's Speech package as a bid to cash in on Brexit's regulatory advantages. The split from the EU let London's financial hub break from restrictive Brussels-era directives and burdensome capital rules.

That break has already produced results. The banker bonus cap has been lifted. Insurers' Solvency II regime (the EU's capital-requirements framework for insurers) has been overhauled. Wholesale market regulations have been streamlined.

The new bill extends that logic to consumer finance. It replaces rigid EU rules on consumer loans with powers that let the UK watchdog update cancellation and information rules quickly in its own handbook.

It also scraps the old system for approving foreign financial firms. Instead of forcing overseas companies to copy UK laws word-for-word, the government can now let them operate here as long as their home rules achieve similar outcomes.

Where does the EU reset fit in?

There's a tension running beneath all of this. Prime Minister Andy Burnham has called for closer ties with the European Union, sparking friction over what that could mean for the City's new regulatory framework.

According to Bloomberg reports, the government is seeking to maintain the City's independence in EU negotiations. It does not want the 27-state bloc's regulations to apply to UK financial services.

That sets up the central strategic question. The bill assumes the UK keeps writing its own financial rulebook; Burnham's EU reset demands closer alignment with Brussels. Both positions can hold for now. Whether they can hold through a full negotiation is another matter.

For the financial services sector, the stakes are straightforward. The bill hands firms faster rule changes, a firmer defence in ombudsman cases and a lighter on-ramp for foreign players. For consumers, the trade is a tighter complaints window and a higher bar to prove unfair treatment.