Channel Islands Financial Ombudsman 2025 Annual Report.

I AboutCIFO

Our Purpose, our Values and our Impact

Our purpose is to be a trusted, expert and independent complaint resolution service for consumers and their financial service providers who are based in the Bailiwicks of Jersey and Guernsey.

We are committed to upholding the principles of fairness, reasonableness, integrity, transparency and effectiveness so that our users and stakeholders can have full trust and confidence in our service.

What we do and the quality of our complaint resolution for those global consumers of our Islands' financial services industry helps maintain the reputation of the Islands as leading International Finance Centres by ensuring fair outcomes and encouraging better service delivery.

What We Do

We investigate, help mediate, and, if required, determine complaints brought by consumers against financial service providers who

are based in the Islands. We can award compensation up to our statutory threshold of £150,000.

It is a free service for complainants which is funded by the financial services industry.

Our Key Objectives

Go to Part 2 of the Annual Report for more details on what we plan to do under each objective (see page 37).

Our Governance

We are an Ombudsman service created by statute and with an appointed board of directors to oversee our operations and service delivery and to ensure our independence.

Our Board reports on its budget and on our operations and performance to both Governments on an annual basis. This is our Annual Report for 2025.

I Contents

PART  1:  OPERATIONAL  REPORT  PART  2:  BOARD  REPORT

CEO's Statement

Case Management Report

Sector Observations

Emerging Issues in Complaint Management

Case Management Performance Report

Operations Report

DSAR and Service Complaint Report Staffing Report

Stakeholder Engagement Report

Financial Performance Report

Summary of 2025 Annual Financial Results

CIFO's 2025 Funding Model: Levy and Case Fees

Looking Forward to 2026

4  Chair's Statement  26 6  CIFO Board  28 6  Governance  29 12  Governance Overview  29

Governance Principles  30

14

Board Governance Statistics  31

18

Risk Report  32 18

Risk Overview  32

20

Business {Internal) Risks  33

22

External Factors  34 24

Risks  34

24

Opportunities  35 25  2025 Year End Performance  36

Framework

25  2026 Key Objectives  37

Environmental Social  39 Governance (ESG) Report

ESG Overview  39 Governance Report  39 Social Report  40 Environmental Report  41 Audited Financial Statements  42

CEO's Statement

Responding to new pressures while delivering our core Ombudsman role

Introduction

Financial sector dispute resolution operates within a complex and fast moving environment. Priorities set at the outset of the year are frequently reshaped by e xternal developments,

emerging risks and rising expectations from consumers, industry and government. 2025 was a clear illustration of this reality.

Against a backdrop of increased fraud, greater challenge to Ombudsman outcomes, and rapid technological change, CIFO remained focused on  its core purpose: delivering fair, independent and expert complaint resolution. The year required difficult judgements about where

to prioritise effort and resources, but  it also demonstrated the resilience of our operating model, the professionalism of our people, and the strength of our governance.

Throughout the year, we remained mindful not only of resolving individual complaints, but of the wider systemic impact of our work - supporting confidence in the Islands' financial services sectors and contributing to their long- term reputations as fair and well-governed International Finance Centres.

Case management experience

Fraud

Fraud was the most significant and impactful complaint theme during the year. By the end of 2024, volumes had increased sharply and fraud had become an area of growing concern across industry, government and consumer groups.

In response, we prioritised this issue in 2025, investing time and expertise in developing

and clearly articulating our approach to the different types of fraud complaints we see. This work enabled consistent decision-making, supported constructive engagement with financial service providers, and allowed us to resolve ou r existing fraud complaint inventory before the end of the year.

Beyond  ind ividual case outcomes, this work has helped shape wider understanding of how fraud complaints should be assessed

in the Islands. We expect  it to support the development of an appropriate regulatory framework and to contribute to more time ly, predictable and fair outcomes for consumers going forward.

Account closures and blocks

Another recurring theme involved transaction restrictions and account closures, often arising from providers meeting their legal

and regulatory obligations around anti- money-laundering (AML) and counter-

terrorist financing (CTF). These cases sit at

the intersection of regulatory compliance, commercial judgement and consumer fairness.

Over the year, we refined our approach to ensure we strike the right balance between respecting providers' legitimate obligations and decisions, while safeguarding consumers' right to fair treatment. Where we identified unreasonable delay or poor communication, we awarded compensation for the distress and inconvenience caused. This work reinforces the importance of proportionality, clarity and timeliness in provider decision making.

Douglas Melville  Principal Ombudsman & Chief Executive  

Operations

Service complaints and Data Subject Access Requests (DSARs)

We continued to see an increase in service complaints following final decisions, alongside a rise in complainant DSARs made during and after investigations. This trend reflects broader experience across Ombudsman services

and public bodies and indicates heightened consumer expectations around transparency and ability to challenge outcomes.

These developments place additional pressure on our limited capacity and budget and

have implications for how an Ombudsman service can continue to operate effectively. Throughout the year, the Board closely monitored this experience, considering how best to balance individuals' data protection rights and transparency with the need to preserve the effectiveness, independence and confidentiality of the Ombudsman process. This remains a key area of focus as we look ahead to 2026.

Stakeholder engagement

This year's Annual Report includes a new section on stakeholder engagement, reflecting both the breadth of our activity and its strategic importance. Effective engagement is essential to maintaining trust and confidence in an Ombudsman service.

Our engagement helps ensure we remain relevant. resilient and responsive. It supports alignment with domestic policy developments, informs continuous improvement. builds predictability and trust in our service with industry, improves consumer understanding of

key risks such as fraud and scams, and enables shared learning with international peers across the financial dispute resolution community.

Demand-led service

As a demand-led, customer-facing service, we have limited control over the volume of complaints referred to our office. What we can control is the quality, consistency and fairness of our analysis and decisions in line with best practice and our statutory public interest mandate.

Our hybrid resourcing model, combining a skilled permanent team with highly experienced contract Ombudsman practitioners,

continued to provide flexibility and resilience. Alongside this we piloted new technologies, including enhanced website search tools and artificial intelligence, to improve efficiency

and accessibility, while maintaining clear boundaries around decision-making and professional judgement.

Theteam

Our ability to deliver for users depends entirely on our people. I would like to thank our Jersey-based staff and our panel of contract professionals for their continued professionalism, commitment and resilience during a demanding year.

I also thank our Chair and Directors for their guidance, support and oversight and for

their continued focus on protecting CIFO's independence, while ensuring we are accountable for our performance. Together, we remain committed to positioning CIFO to meet the challenges and opportunities for the next decade.

Sector Observations: Banking

Fraud

In many ways, fraud was our defining theme for 2025. It was one of the top three issues raised with us by customers and it was the main issue in 15% of the cases we resolved. While 15% might seem like a relatively small proportion, the amounts of money stolen, the impact on people's lives, and the distressing stories we heard from customers made it the most significant issue we have dealt with so far this decade. Working positively with banks to put things right in these complaints was our biggest success story of the year.

A central part of this success came from our careful work in building our approach to assessing and resolving fraud cases. Our approach, which draws on local legislation and regulation, recognises that a customer's vulnerability arises not only from their personal capacity but also from the specific circumstances surrounding the fraudulent incident. This broader understanding of vulnerability reflects developments in the UK and, more widely, in the EU and internationally, including in

sectors beyond financial services. It helped us better understand what it means to be placed in a vulnerable position. As a result, our reviews are more situation-specific, leading to more nuanced, fairer assessments and outcomes that better reflect the realities faced by victims of increasingly sophisticated frauds.

Fraud cases opened

2022  2023  2024  2025

Sector Observations: Banking

Our approach to resolving fraud cases

FRAUD

Authorised Push Payment (APP} Fraud

(when a customer is tricked into willingly transferring money to a fraudster's account e.g. investment scams. romance scams)

Authorised by customer

Customer liable for loss unless bank on notice or reasonably should have been aware in the circumstances

Other Frauds

(e.g. scammer calls customer to say account compromised, lost/ stolen card, security code compromise)

Not authorised by customer

Customer hab1hty requires evidence of customer gross negligence

Additional Factors:

Action and time taken by bank to recall or recover funds transferred once aware of the fraud Customer vulnerability (capacity and/ or situational)

Our engagement with banks throughout 2025 was broadly constructive. The banks have shown a willingness to reflect on their internal controls and communication processes, and how to improve them. We consider these reflections to be of great benefit both to the banks themselves and to their customers. Already, several institutions have begun implementing new risk management and fraud prevention systems, informed in part by insights emerging from cases resolved with us. While fraud as an issue is unlikely to go away anytime soon, there is clear evidence that our engagement with an industry willing to listen is fostering a more resilient and responsive environment for customers.

Sector Observations: Banking

CaseStudy1

Unauthorised payments following OTP scam

What happened

A couple received a phone call from someone claiming to be their bank warning them about suspicious payments on their joint account.

Believing the call was genuine, they confirmed some of their account details. During the call, a one-time passcode (OTP) was disclosed to the fraudster who then used it to register a new device.

What we considered

• the nature of the scam and its impact on the couple

whether sharing an OTP amounts to authorisation of the transaction

• whether it was fair and reasonable for the bank to rely on its own exclusion of liability where there was customer carelessness

• whether the couple's actions objectively met the threshold of gross negligence

What we found

the couple believed they were dealing with their bank

• the payments were not authorised by the customer

sharing the OTP may have been careless but did not amount to gross negligence

• the bank's warnings were not sufficient to shift the liability to the couple

Shortly afterwards, three payments totalling £4,750 were made from the account without the couple's knowledge or consent.

The bank said that use of the OTP meant the payments were authorised under its terms

and conditions.

what the bank did to prevent the customer

sharing the OTP inappropriately  COMPLAINT  UPHELD

the bank was required to refund the loss and Key learnings  pay compensation for distress & inconvenience

Being deceived into sharing an OTP during a scam does not automatically mean a customer authorises a payment. Each case must be assessed on what is fair and reasonable, taking account of context including reasonable belief about who they are in communication with, clarity of warnings, and the circumstances at the time.

CaseStudy2

Multiple unathorised payments following an impersonation scam

What happened

Sarah's work colleague received a scam call claiming there was fraud on Sarah's account. The colleague then sent Sarah a note for her to call them back. Sarah called the number provided.

During the call, she was persuaded to log into her online banking, install third-party software and share multiple security codes, enabling the fraudster to gain remote access to her devices, resulting in £24,000 being stolen.

What we considered

the nature of the scam and its impact on Sarah

• whether Sarah's actions objectively met the threshold of gross negligence

whether the bank acted reasonably in allowing the payments to proceed

• whether the bank acted quickly enough upon notification of the scam to recall the funds from the other bank

What we found

Sarah believed she was dealing with her bank

• multiple security codes and account credentials were disclosed, and the account security was compromised

the bank provided clear warnings not to share the security codes

• Sarah's actions met the threshold of gross negligence

COMPLAINT  NOT  UPHELD

Despite feeling uneasy at points, she  the bank was not required to reimburse the loss continued to follow their instructions.  Key learnings

Where a customer takes numerous separate actions that compromise account security, and

The bank declined to reimburse her, stating

ignores real-time warnings, their conduct can amount to gross negligence. In this case, it's the she ignored warnings, shared security codes

combined impact of the customer's actions, not just one error, that resulted in the customer being and allowed remote access to her devices.

held responsible.

Sector Observations: Banking

Account Suspensions

In 2025, around 14 % of our cases related to bank accounts being frozen or closed. Two main problems kept coming up: first. some banks restricted customers' accounts without explaining why or giving them sufficient warning; and second, some banks took too long to fix these problems, even when the customer had done nothing wrong.

Banks may restrict. freeze or close an account for a range of reasons. In some cases, action is required to meet legal and regulatory obligations, including financial crime controls and other duties that can limit what the bank is able to share with the customer. In other cases, the bank may make a commercial or risk management decision to change its appetite for certain customers, products or jurisdictions.

When customers complain about these actions, our role is to consider whether the bank acted fairly and reasonably in the circumstances. For example, whether it communicated as clearly as it could, applied its processes properly and progressed any necessary checks without undue delay.

Where the restriction or closure is driven by legal and regulatory responsibilities, we will generally defer to the provider on the underlying decision given the legal constraints around sensitive information. We will still consider whether the time taken to carry out reviews was fair and reasonable. Where the action reflects a commercial decision, and the customer has been given appropriate advance notice, we will not generally engage with the decision itself. However, a customer's complaint about such actions of the bank will still be valid if they were not carried out properly.

To help resolve these complaints, we have looked again at how we assess compensation in cases where an account is restricted but the bank has made mistakes. This revised approach encourages banks to talk clearly and promptly with their customers when they restrict an account and to reduce delays when sorting things out, while also respecting the complex legal and regulatory responsibilities that banks face.

Sector Observations: Insurance

@ Insurance

There was good news in the insurance sector, especially in Guernsey, where the number of cases continued to fall. This reduction likely happened because insurers and brokers are getting better at communicating with their customers, explaining things clearly, and sorting out problems earlier. Our main observation is that when businesses do this, their customers feel better supported and fewer complaints arise. This positive trend demonstrates the value of the effective working relationships that many brokers and insurers have built up with us in recent years.

Insurance cases opened in Guernsey

2021  2022  2023  2024  2025

Sector Observations: Other

@ Motor finance and consumer credit

If we look to the future, the customer experience of obtaining motor finance and other forms of borrowing is increasingly in the public eye, and we expect this to continue throughout 2026.

Motor finance agreements, especially, have received a lot of publicity in the UK, where the Financial Conduct Authority and the Financial Ombudsman Service are examining potential breaches relating to the non-disclosure of discretionary commission arrangements, the fairness and reasonability of this non-disclosure, and whether it affects customer decisions and cost of credit.

Locally, we are experienced in dealing with lending complaints; even before the recent regulatory framework was introduced in Guernsey, we could look at complaints about whether loans were affordable or properly explained. Toward the end of 2025, we began discussions with a range of groups to understand how we might apply the different laws and regulatory systems in Jersey and Guernsey to motor finance complaints. While we are mindful of the UK approach, we recognise that the financing arrangement is only one part of the overall package when buying a vehicle, and that the wider circumstances of the individual buyer, who may sometimes receive a price discount when financing the vehicle purchase, will also be relevant to our assessment.

The approach we took on fraud cases which emphasised the importance of working together, openness, and clear expectations, will also guide our approach to resolving motor finance complaints. We look forward to engaging with industry and consumer representatives as we review complaints in this area in 2026.

@ All sector case studies

See  all 2025 Case  Studies

Emerging Issues in Complaints Management

Al {Artificial Intelligence)

We have noticed more consumers using Al tools and large language models like ChatGPT to help write the complaints and email messages sent to us. We are broadly supportive of anything that can help customers explain what's happened to them and what they would like to see put right. We also recognise Al is a powerful tool that helps the finance industry articulate their side

of the story too. But we are aware of its limitations. For example, we've found some Al-generated messages that are unclear or inconsistent with what the customer has previously told us. Sometimes Al-generated responses include a lot of irrelevant information that is not relevant to our efforts to reach a fair outcome.

We believe Al is here to stay and, while it brings many benefits, we encourage customers and financial service providers to use it in a way that both supports their own views and supports us in our efforts to resolve complaints as efficiently as possible .

•

Emerging Issues

Increased challenge to case outcomes

In 2025 we continued to see a trend for increased numbers of Data Subject Access Requests (DSARs) by complainants, and challenges to our decisions in the form of service complaints. This reflects the experience seen by other Ombudsman services and public bodies generally.

In response to this trend, we are in the process of adopting a new approach to disclosure for our complaint management process. This new approach will allow for earlier sharing of evidence with both parties where it is fair and appropriate to do so. This will ensure there is greater transparency and we are able to build better trust and confidence with our users, particularly complainants, around what we have based our decisions on and why.

We hope this new approach will address some of the underlying concerns we see expressed in the DSARs and service complaints made to our office.

Case Management Performance Report

2025

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OF  COMPLAINANTS ARE  NOT  LOCAL TO  THE  CHANNEL

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97%

OF  COMPLAINTS ARE  FROM  RETAIL CUSTOMERS

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2025  COMPLAINTS

For the detailed statistics for 2025, see our website.

STATISTICS

Complaints: are complaints received by CIFO about FSPs whether or not they are ultimately confirmed as falling within CIFO's statutory mandate

Cases: are complaints that are within CIFO's statutory mandate (with some exceptions that may be found to be out-of-mandate  after a closer review of the complaint)

Case Management Performance Report

(3:)  B  D

571  405  403  60  % COMPLAINTS  CASES  CASES  CASES  SETTLED

RECEIVED  OPENED  CLOSED  INFORMALLY

£1,979,865  CnonI-FdisOclo  suAre WagrAeemR enD ts ED  IN  COMPENSATION

*Total settlement  amounts are a multiple of this figure but subject to

Complaints: are complaints received by CIFO about FSPs whether or not they are ultimately confirmed as falling within CIFO's statutory mandate

Cases: are complaints that are within CIFO's statutory mandate (with some exceptions that may be found to be out-of-mandate  after a closer review of the complaint)

Case Management Performance Report

OUTCOME  OF  CASES  OPENED

Withdrawn by

Out-of-mandate complainant  2%

2%

JERSEY  VS  GUERNSEY  CASES  COMPARISON   JGeurseernysey

Banking Investments/ Funds

Non-Bank Money Services I Credit

Pensions Insurance

231  29

4  111

Complaints: are complaints received by CIFO about FSPs whether or not they are ultimately confirmed as falling within CIFO's statutory mandate

Cases: are complaints that are within CIFO's statutory mandate (with some exceptions that may be found to be out-of-mandate  after a closer review of the complaint)

DSAR and Service Complaint Report

In compliance with the orders imposed on us by the Jersey Information Commissioner in 2025, following a complaint made against our office in relation to our management of a complainant's DSARs, we have updated our internal policies and procedures around the management of DSARs and service complaints and delivered internal training to our staff. These are now aligned to best practice and, also demonstrate our commitment to transparency and the integrity of our office.

We have also adopted quarterly reporting to the Board of our DSAR and service complaint experience, and we have incorporated it into our Annual Report in this new section.

DSAR and service complaints statistics

In 2025, we received 8 DSARs. This was 3 more than in the previous year. All DSARs came from CIFO complainants, and 3 came from the same complainant. In all cases, the complainant was dissatisfied with the provisional or final decision made on their complaint.

In 2025 we recorded 10 service complaints; 1 was later withdrawn.

We have reviewed the interaction between our DSAR and service complaint experience over time to assess what trends are emerging and can already see there is a close interaction between them.

10  SERVICE  COMPLAINTS

9

8

7

6

5

to Outcome   Irregularity  Communication Transparency  Di-sNcloons-ure  Fac-tual Error 4

3

2

1

0

Challenge  Delay  Bias  Procedural  Poor  Lack of

91%  ochf aslelervnigcien gcotmhepolauintctso marose e of tfhroemir ccaosme plainants

Multiple reasons for service complaints account for the data provided.

DSAR and Complaint Statistics

DSARS  OUTCOME  OF  COMPLAINT

aC:O r 0r 00l  l

100%

Notuphel

DSARS  WERE

RELATED  TO

COMPLAINT

CASE  FILE

25% OF  DSARS  WERE

ALONGSIDE  A SERVICE  COMPLAINT

Staffing Report

Our staffing remains stable, and we operate a hybrid office and remote working policy for our staff.

We remain committed to the development and training of our staff and their well-being. As part of our staff-relationship programme, we carried out a staff benefit survey to assess if we were continuing to meet their needs. The outcome of this survey confirmed that flexible working and supporting their healthcare and retirement benefits remained our staff's priorities.

Staffing statistics

KEY  STAFF  STATISTICS  2025  AGE  PROFILE

Number of Staff  10

30-45 Ratio Part-time to Full-time  1:9

Staff Turnover  10%  145-551 Total Hours of Staff Training  151 hours

Employment Claims  0  155-651

STAFF  GENDER  MANAGEMENT  GENDER RATIO  RATIO

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Our Resourcing Model

We outsource our Human Resources and Information Technology functions to external providers. This allows us to control our costs, but also benefit from the specialty expertise they provide.

For our complaint management, we continue to use a hybrid resourcing model made up of both permanent and contract staff. This allows us to leverage the experience and additional capacity offered by our contract Ombudsman panel and new contract Adjudicator, sourced mostly from the UK Financial Ombudsman Service, while maintaining a permanent workforce to manage our core workload. This also allows us to keep our staffing costs down, which remains our greatest recurring annual expense. All staff operate on our secure IT platform, which is monitored and tested for its resilience against cyber-attacks. We undertake regular staff training and have in place policies and procedures to protect individuals' personal data and to ensure all data is kept secure.

Hybrid resourcing model

£2,734

£2,243  £2,189  £2,170

2020  2021  2022  2023  2024  2025

Complaints received per year  Cases resolved per year  - - Cost per complaint

Our introduction of a hybrid mixed model of employee and  contract ombudsmen has enabled CIFO to keep on top of its  growing caseload while simultaneously containing costs.  

The reactive nature of our work means that there will be periods  when the volume and complexity of complaints referred to CIFO  varies. It is more cost-effective to bring in contractors than  additional permanent hires to meet additional variable demand.  

Stakeholder Engagement Report

2025 stakeholder engagements

2025 was a busy year for CIFO and its stakeholder engagement. We benefitted from the additional resources provided by our new Head of Legal, Policy and Compliance who supported our CEO and Principal Ombudsman in CIFO's stakeholder engagement activities.

Key highlights from the year were:

• the policy work we undertook with Government of Jersey on fraud and consumer lending

• the presentations we gave to the newly-elected members of the Committee for Economic Development in Guernsey and to the Jersey Government Scrutiny Panel for Economic and International Affairs about our operations and impact

• team representatives at the annual events of the Ombudsman Association's and the International Network of Financial Service Ombudsman Schemes (INFO) Network's annual conferences

In Q4 of 2025 we also recruited a new Stakeholder Outreach and Communications Officer to support the team in undertaking its stakeholder outreach and media management.

As part of our new and transparent approach to our performance, we have mapped those stakeholder engagements we undertook during 2025 into categories of stakeholder group (see below):

Peers  Industry  Regulators  Government  Con-sumer Groups

Other  Financial Service  JFSC, GFSC, ODPA,  States of Guernsey  General Public, Ombudsmans,  Providers  JOIC, JCRA, GCRA  and Government of  Media Outlets, Third Forums and  Jersey  Sector

Arm's Length

Organisations

User survey

One of our deliverables for 2025 was to introduce a user survey for our Ombudsman service. It was launched in May. It was designed to be automatically sent by our case management system to the complainant and financial service provider (FSP) upon case file being closed. The results are anonymised.

We have had a good response uptake, with a response rate of approximately 20-25% since its inception. This compares well with our peers who typically have a response rate of 20% or less.

Its purpose was to help us understand what we were doing well and where we can make improvements in the future. The Board has been kept advised of results each quarter. We have been encouraged to see a consistent improvement in our users' experience since the survey was launched, with the results showing our performance to be in the top quartile for nearly all aspects of our service delivery.

Complainant overall satisfaction  FSP overall satisfaction

*****  *****

3.5  4.6

out of 5  outof5

How complainants rated key areas

°c&   Understanding

Handling of case

the process

3.5  3.4

How FSP's rated key areas

°c&   Understanding

Handling of case

the process

4.4  4.9

Us  ©  80% Confidence in  of complainants  said staff

Website usability  fair resolution  were polite, professional

3.7  3.4  and helpful

Us  ©  100% Confidence in  of FSPs said CIFO took

Website usability  fair resolution  sufficient steps to

4.3  4.7  mediate the complaint

Looking forward to 2026

Following complainant feedback in 2025, we have initiated additional mediation training for our case management team. Another area we identified for improvement was to better manage complainants' expectations as to the likely outcome of their complaints. We expect to undertake further work on this during 2026.

Financial Performance Report

Summary of 2025 Annual Financial Results

Our performance against our 2025 budget was satisfactory with a surplus of £72,000 (£13,000 additional income and £59,000 cost savings). This performance reflects the overall positive result we saw in our cashflow during 2025 as we shifted our funding framework to a more user-pays model with the new higher case fees and continued rigorous expenditure management.

INCOME   Actual

Budget

Other

Income  £19,000

Jersey  £558,680 Levies  £570,786

Guernsey  £673 ,2 58

Levies  £66 4 ,555

Case Fees  £2 71,575

Jersey  £2 3 4 ,94 5 Case Fees  £181, 3 00

Guernsey  £2 2 0,570

EXPENDITURE

Outsourced  £19 3 ,4 4 5

Services  £2 2 3 ,000

Property  £66,004 Expenses  - £66,575

Administration  £94 ,l o o

Expenses  -

Staff-Related  £196. 4 2 3

Expenses  £2 11,3 3 7

£858,91 3

Salaries

£858,89 3

£54 ,3 2 3

Governance  -

£55,000

Financial Performance Report

CIFO's 2025 Funding Model: Levy and Case Fees

At the end of 2024 we saw an increase in the proportion of banking complaint cases. This took banking complaints back to around 50% of the complaints CIFO received during the year. As a result, the Board determined that the existing levy allocation and funding model remained fair and appropriate to the size and scale of CIFO's operations. Industry supported this position in our 2025 Levy Consultation.

Demand-led service and a successful and sustainable funding solution designed in response to the views of industry

2025 Annual Individual FSP* Levy  2025 Case Fee Payable Per In-Mandate

£17,158  Complaint Made to CIFO

Money Services /  - -Funds - Non-Levy Payer  £1,800

£1,638  £1,638  £1,638  £1,638  

Non-Banking  Pensions  Investments/  Insurance  Banking  Levy Payer  £1,125

Credit

!'I:iil8li, ;  50:50 banks Fanudn dnon-bank ing FormuFlaS:PsCIFO's funding model is based on a 50:50 sectoral  split between

•

Simple, Non-Competitive  Model: The individual  levies are the same across both islands User Pays: The case fee ensures there is a user pays element to CIFO's funding model

*FSP - Financial Service Provider

Looking forward to 2026

CIFO's current funding model continues to be a suitable formula for raising income to cover our operating costs. We received no adverse feedback on the 2026 proposed levy amounts in our levy consultation and our case fees for 2026 remain the same as they were in 2025.

In 2026 we are looking to deliver some infrastructure projects to enhance and modernise our service delivery and our compliance and data management systems.

PART  2:  BOARD  REPORT

Chair's Statement

Taking our responsibilities seriously

Marking a decade of service and leadership

As we mark the Channel Islands Financial Ombudsman's (CIFO) tenth anniversary,

I present my third annual statement as

Chair of the Board. This milestone gives us an opportunity to reflect on a decade of dedicated service, growth and accountability to our stakeholders. The Board is committed to overseeing CIFO's responsibilities with seriousness and foresight, ever mindful of

its duty to protect fairness, integrity, and confidence in the financial sector.

Governance

Our approach to governance this year has been defined by continuous improvement

and alignment with best practices. The Board responded to the findings of the Jersey Office of the Information Commissioner (JOIC) on data protection, implementing recommendations to enhance data management, transparency and accountability. We have updated our policies for Board effectiveness and governance. These measures have ensured our governance is robust and fit for purpose to the standards expected by both governments and those we serve.

Ombudsman service performance

Throughout 2025, we placed a renewed emphasis on our users' experience, drawing insights from new feedback surveys and our direct engagements. Case closures have increased and settlement rates reflect the dedication of our team to resolving disputes efficiently and fairly without the need to go

to a formal determination. New performance measures were introduced to better track outcomes and inform future improvements, ensuring that our service continues to evolve and respond to the needs of its users. Cost per complaint has fallen, while the team continues to meet our published timeliness requirements.

Operations

Operationally, CIFO has embraced technological advances. The adoption of Al tools has initiated our programme to streamline case management functions and enhance user support. These innovations are not just modern conveniences. They are strategic investments in CIFO's ability to serve stakeholders with agility and responsiveness.

Antony Townsend  Chair,  CIFO  Board of Directors  

Financial performance

Sound financial stewardship and maintaining fairness and equity in our industry funding model remains a priority. During 2025, CIFO maintained disciplined cost management, generating a modest surplus despite budgetary challenges. Prudent resource allocation has enabled us to invest in service enhancements while safeguarding financial sustainability. The Board scrutinises financial performance, ensuring our operations are both efficient

and resilient against future uncertainties, with prudent levels of operational reserves. During 2026 we will undertake a further review of our costs.

Risk

In 2025, the risk environment became more complex. The widespread adoption of Al has contributed to increased legal challenge, including higher volumes of data subject access requests, service complaints and judicial review threats. At the same time, expanding regulatory and governance obligations and greater expectations of our transparency, have heightened our compliance risk and prompted changes to how we deliver our Ombudsman service. We also faced operational pressure from a surge in mass fraud complaints and continuing legislative gaps relevant to our mandate, which test

our case management and place strain on resources. The Board has responded by reviewing risks and strengthening mitigation to support CIFO's resilience.

External factors

The year has been affected by significant external influences: geopolitical tensions, economic fluctuations and regulatory developments have all affected our operating context. Market disruption caused by the rapid proliferation of Al technologies underscores the importance of adaptability and foresight. The Board closely monitors these trends, factoring them into our strategic planning to safeguard CIFO's relevance and effectiveness for the decade ahead.

Looking forward to 2026

As we look forward to 2026, the Board remains fully committed to delivering on our responsibilities. Our past ten years have been marked by progress, learning, and a steadfast dedication to fairness. Our excellent links with stakeholders in both jurisdictions have been critical to our success and we look forward

to maintaining that dialogue. We remain committed to guiding CIFO and to sharing our expertise and experience to help deliver good outcomes for the organisation, its users and the two governments. We also continue to make plans for Douglas Melville 's eventual succession as CEO and Principal Ombudsman, and for his team's progression.

Finally, I wish to thank my fellow Board members for their expertise and dedication, and Douglas, his team and our external Ombudsmen for ensuring their continued delivery of a high-quality service for the Islands' financial services industry and their users.

Governance

Governance Overview

As a Board we have reviewed our own performance and identified improvements we can make to our board governance and effectiveness which reflect best practice. We have adopted a new Board governance and effectiveness framework which documents our current practices and incorporates enhancements.

We, as CIFO's Board, are responsible for its strategic planning, the financial and performance oversight of its operations and to oversee its risk management. We will also undertake each year to make a declaration of effectiveness following an internal self-assessment programme.

To facilitate our new framework, we have adopted a governance matrix tool for the decisions we make as a Board.

Governance matrix

1. Risk

Identify risks  

Assess likelihood and impact  Update Risk Register  

Determine risk management  plan and timetable  

4. Budget  

Assess expenditure and  cash flow against budget  

Assess if changes required to  budget  

Review management  proposals and assess if  within budget or additional income or capital required, and if reserve to be used

2. Key Objectives

Assess risks and required actions against objectives

Review management proposals

Prioritise projects aligned to strategic objectives

3. Operational Impact

Assess impact on staff resourcing and budget

Determine any new appropriate KPls and reporting lines

Identify any system changes/controls

Governance

Governance Principles

Built within our new framework are our governance principles, which are supported by internal policies and controls:

Independence: Board conflicts policy, evidence-based decision- making to ensure objective decision-making, risk assessment framework, education of elected representatives to ensure independence of CIFO and its operations are protected.

"O'ansparency: we are committed to robust reporting and transparency with our users and stakeholders. We publish our board remuneration, the minutes of our meetings and board directors' attendance records.

Accountability: adopted a new board decision-making protocol with action log and action tracking, evidence-based decision- making and integration with risk management policy, undertake statutory annual reporting of CIFO's performance and board self- assessment and annual evaluation programme.

Diversity and Inclusion: appointments made in line with public appointment rules for diversity and inclusion ensuring representation from both islands and for the board to be constituted with

individuals who hold skills and experience relevant to public body governance, financial services and consumer protection.

Integrity: We are committed to maintaining the highest standards of ethical conduct as a board and have adopted an internal board code of conduct.

Governance

2025 Board Governance Statistics

CIFO  BOARD  REGISTER  OF  INTERESTS

Board

Public Paid  •• ••

Public Honorary

Private Company Honorary

Employment/Consultancy/Trusteeship Public  Private  

Professional Membership  Ordinary Member  Committee Member  

Details of interests can be found on our website

UK   Guernsey Jersey

Upon appointment of the new Jersey Director, this register will be updated.

Risk Report

Risk Overview

In 2025, the Board saw a marked escalation across all key risk categories, driven in part by global geopolitical instability and by internal operational pressures. Although these risks were effectively managed, largely through internal resources, they constrained progress on some longer-term strategic projects to modernise and enhance the Ombudsman service.

To strengthen our approach, we reviewed and updated our risk management processes. The revised framework provides clearer, more systematic monitoring of risk indicators and management actions, and enables the Board to better assess, track and communicate the short-, medium- and long-term impacts of emerging and ongoing risks.

The framework identifies six risk categories and distinguishes between internal risks and those arising from external factors beyond CIFO's control.

See the Board's new risk matrix

with the number of identified risks which escalated in 2025.

Risk matrix

Risk Report

Business (Internal) Risks

In accordance with our new Risk Framework, the specific risks we identified in 2025 have been rated as to the seriousness of the risk so

that we, as a Board, were able to take actions to resolve or reduce the risk documented. Many of these risks created impacts across one or more of the CIFO key risk categories.

See below a heatmap of those specific risks which were reviewed during 2025:

Internal factor risk assessment scale 1  2  

Likelihood  Five being rated the highest and 1 the lowest

2  ••••••••••

Al disruption  Stakeholder  New  Over-reliance  Public  Vexatious  weaponlsatlon  Above RPI  cost  Mass fraud  Judicial  review  JOIC  Public and cyber risks  challenge  governance  on manual  judgement  complainants  of DSARs  increase  complaints  threat  Statement for

& compliance  processes  involving  CIFO  DSARbreach

obligations  Director

We have used this new risk framework to help us determine our priorities for the team and what their deliverables should be for 2026. This is to ensure that any identified risks which are outstanding from 2025 are properly mitigated.

External Factors

Risks

The Board's assessment of the global and local political landscape identified the following 4 key risks in 2025 which had either a direct or an indirect impact on CIFO and its operations.

• New and additional conflicts being created between the operation of its statutory framework as an Ombudsman service and its legal obligations as a public body under an evolving legal and regulatory landscape. This new landscape creating different rights for its users and stakeholders which may partially or fully conflict with those set out under CIFO's law

• Challenges to CIFO's mandate and the resolution of complainants' complaints created by the growing dissonance between our domestic financial services' regulatory rules and international rules

• Potential changes in the number of licensed financial service providers in the Islands who are levy payers subject to CIFO's mandate

• An international shift in the public, political and industry perception of the value of regulators and ombudsman services

To address external risk, we have added them to our risk management programme, risk rated them, identified strategic responses and put in place 2026 deliverables for the team to help mitigate the impact of these risks, where possible. We will keep them under review.

34  

External Factors

Opportunities

The Board also monitored potential opportunities presented by the global environment. The introduction of Microsoft 365 Copilot at the end of 2023, together with the global trend for uptake of Al by businesses and financial services during 2024 and early 2025, presented us with an opportunity to see how Al could support our operations on a secure platform within our existing IT software infrastructure.

The team was authorised to undertake a pilot of Microsoft 365 Copilot, obtain the necessary licences for its permanent staff, and put in place an Al use policy which prohibited its use for any Ombudsman decision-making functions.

We tested the benefits of Copilot with a staff survey, the feedback showing a high uptake by staff across a variety of tasks with a general perception that it had improved the quality of their work output.

o*vera*ll s*atis*fac*tion  Tasks Copilot is used for

3.8

outof5  71%

Impact of Copilot on work quality  

• 2_5-

50%  

web search  summarising  searching CIFO  Drafting  Analysing Results  Documents  Drives  Data Summary

*Copilot -staff can use for more than one category of task

In addition, the team identified that further training was required to ensure consistent use by our staff of Copilot and better communication, internally and externally, as to when it had been used. This to ensure better internal quality assurance and governance over internal use of Al.

We expect this careful adoption of Al to continue to deliver better outcomes for our organisation and its users over 2026 and beyond, and this forms part of our deliverables for 2026.

2025 Year End Performance Framework

OPERATIONAL

AIM

Al Implementation

Ombudsman Association Validation

Operations Management

I  2025  OBJECTIVES  I Improve operational infrastructure

Undertake mapping exercise for CIFO compliance

Address FSP delays in the case management process

RATING  I  PERFORMANCE  PROGRESS

0

Adopted Microsoft Copilot

0 Preparatory work undertaken

0

Performance improved

PEOPLE

AIM  I  2025  OBJECTIVES

Benchmark staff salaries and Staff-Relationship  benefits and undertake a staff Programme  benefits survey to ensure CIFO

remains an employer of choice

STAKEHOLDER  RELATIONS

AIM  I  2025  OBJECTIVES

I  RATING  I  PERFORMANCE  PROGRESS

Ran a staff culture team training event

Issued a staff benefits survey to all permanent staff

Compensation benchmarking exercise I  RATING  I  PERFORMANCE  PROGRESS

Improve User  ciBnautsoildec caalnsoesaumurteao nmaagteemd euser ntfusnucrtvieoyn on  0 User survey launched with feedback reported Experience  to Board

Enhance stakeholder engagement

Stakeholder  to increase frequency of in- Increased stakeholder engagement with Engagement  person and virtual stakeholder  introduction of new reporting mechanism

engagement

Policy work undertaken with both Islands

Monitor impact on CIFO's mandate

of the new consumer credit  Undertook analysis of UK Supreme Court CIFO Mandate  regimes in the islands and other  motor finance case

policy developments  Continue review of draft Jersey credit

legislation

Funding Model Reporting KPls

Monitor and review CIFO's funding model

Review and enhance CIFO's KPls

0 cQausaer tfeerelycboonasrudltraetvioienw and 2025 levy and

0. IDannStarAolRydsuaiscneddScehravnicgeeCoofmouptlcaoinmtree rpeoprotirntgin and g,

2026 Key Objectives

As part of our update to our risk management and governance frameworks, we have reviewed the performance of our 2025 deliverables and put in place new deliverables for 2026. Below are our 2026 deliverables.

Operational

Cost Management

Undertake a formal review of our costs

0Jr Al Adoption

Perform a baseline assessment and identify cost savings through selective adoption of Al and automated processes

Upgrade Data Management System

Undertake operational scoping for upgrade to data management system New User Interface

Implement new chatbot agent to improve user experience on the website

Budget Approval

Seek to enhance the existing process for CIFO's budget approval with both governments

People

Staff Training

Enhance skills and expertise of team through training

CEO and Principal Ombudsman Succession Plan

Develop succession plan for CEO and Principal Ombudsman

Board Succession Plan

Develop and execute Board succession plan and Board effectiveness review

Hybrid Resourcing Model

Keep hybrid resourcing model under review

2026 Key Objectives

Stakeholder Relations

Ombudsman Association Accreditation

Procure renewed international accreditation of CIFO as an Ombudsman service Improve User Experience

Leverage experience from user survey to make improvements

Consumer Credit Framework

Provide insight and commentary on the Islands' consumer credit frameworks

Fraud Policy Development

Support fraud policy development

CIFO Mandate

Engage with Governments to update CIFO statutory framework and mandates to ensure fit for users

Development of Motor Finance Approach

Share insight and proposed approach for motor finance complaints

Stakeholder Engagement Programme

Undertake regulatory landscape review and stakeholder engagement programme

Policy & Procedures Benchmarking

Gap analysis against CIFO policy & procedures against best practices for public bodies

Environmental Social Governance (ESG) Report

ESG Overview

We have tailored our ESG priorities in line with the role we play as

an Ombudsman service, an institution whose objective is to deliver justice, and which has a global reach. Our inter-connected objective is to ensure we maintain staff with the relevant expertise and experience to deliver fair and just outcomes to our users. In doing so, we seek to deliver good environmental impacts where we can.

This section reflects our organisational prioritisation of these goals, with Governance being recognised as our highest priority goal.

Highlights from 2025

0

Governance Report  

As an Ombudsman service, our priority is to  deliver access to justice and fair outcomes  to our users.

Hosted a visit to Jersey  Participation  in

We actively seek to share our experiences  by colleagues from the  international  conferences and learn from our peers, those based in the  Financial  System Mediator  of our peers and sharing

in Armenia for a shared  expertise with the World Islands and those within our international  learning  experience  Bank around financial

professional network.  dispute resolution

ESG Report

00

nooo Social Report

To deliver a high quality and expert Ombudsman service, we believe it is essential that we invest in our staff and their well-being and provide a supportive framework for their diversity and inclusion.

0  0  Equity  

Highlights  from 2025  

ESG Report

Environmental Report

CIFO as an organisation is committed to reducing our carbon footprint where it is operationally possible but without compromising our user and stakeholder experience which is vital to our role as an Ombudsman service.

Our hybrid remote working policy for staff and our staff printing policy allow us to limit our staff's carbon footprint.

Highlights from Travel Survey:

56% of staff work from home at

> least

w >

a:

w  16

=>

en

...J  b1;1siness

> tr1ps

<t

a:  were taken by staff in 2025

I-

How staff usually commute to work

Bic-ycle  Car  Bus  Carpool/  Wal4 king

,2 ..._----- 2 -----, 2 - - - - - - - ·

(alone)  rldesharing

staff can take more than one form of transport to and from work

Business travel summary

LL

LL

<t

78%

I-

C/)

of staff said virtual meetings have reduced business travel

1 0 tbr11;p1ss iness

were taken by Board members in 2025

4/•, ...  1 ..  4 . >)

I   ,,

Jersey- Jersey- Jersey- Jersey- Guernsey  UK  EU  Oceania

7  6  2  1 Business travel summary

10  0  

Domestic  Short Haul  Long Haul

·Jer-sey-f Jersey-

North America  Asia

0  0

C2ha0nne2l Is5lan dsAFinuancdialiOtmebuddsman

Financial Statements

for the year ended 31 December 2025

INFORMATION

The financial statements of the Channel Islands Financial Ombudsman are the combined financial statements of the Office of Financial Services Ombudsman Guernsey and the Office of the Financial Services Ombudsman Jersey, referred to in the body of the financial statements as the OFSOs.

Directors Antony Townsend - Chair

Robert Girard - Vice Chair

Jennifer Carnegie - resigned 31.12.2025 Hayley North

Administration Office Channel Islands Financial Ombudsman

No 3 The Forum

Grenville Street

St Helier

Jersey

JE2 4UF

Independent auditors RSM Channel Islands (Audit) Limited

PO Box 179

13/14 Esplanade

St Helier

Jersey

JE4 9RJ

Principal Ombudsman Douglas Melville

CHANNEL ISLANDS FINANCIAL OMBUDSMAN CONTENTS

Page Chair's statement 1 Report of the Directors 2 - 3 Auditor's report 4 - 6 Statement of income and retained earnings 7 Statement of financial position 8 Statement of cash flows 9 Notes to the financial statements 10 - 21

CHANNEL ISLANDS FINANCIAL OMBUDSMAN 1 CHAIR'S STATEMENT

for the year ended 31 December 2025

The Chair presents his statement on the 2025 accounts.

The Channel Islands Financial Ombudsman ("CIFO") is the joint operation of the Offices of the Financial Services Ombudsman (the "OFSOs") established by the Financial Services Ombudsman (Bailiwick of Guernsey) Law 2014 and the Financial Services Ombudsman (Jersey) Law 2014.

These financial statements are prepared on a combined basis to reflect the joint operation.

Income for 2025 increased due to an increase in billable case fees. While there was an increase in expenditure due to inflation, there was an operating surplus at the end of the 2025.

The accumulated surplus at the end of 2025 represents the operating reserve. This represents six months of reserves intended to provide a buffer to cover the unforeseeable volatility inherent in a demand- led case-working organisation, and to guard against the risk of irrecoverable legal expenses.

Antony Townsend Chair

CHANNEL ISLANDS FINANCIAL OMBUDSMAN 2 REPORT OF THE DIRECTORS

for the year ended 31 December 2025

The directors present their report and the financial statements for the year ended 31 December 2025. DIRECTORS' RESPONSIBILITIES STATEMENT

The directors are responsible for preparing the Report of the Directors and the financial statements in accordance with applicable law and regulations.

The Financial Services Ombudsman (Bailiwick of Guernsey) Law 2014 and the Financial Services Ombudsman (Jersey) Law 2014 require the directors to prepare financial statements for each financial year. Under those laws they have elected to prepare the financial statements in accordance with FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland and applicable law.

Under the Financial Services Ombudsman (Bailiwick of Guernsey) Law 2014 and the Financial Services Ombudsman (Jersey) Law 2014 the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Offices of the Financial Services Ombudsman ("OFSOs") and the profit or loss of the OFSOs for that period.

In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements;

• assess OFSOs' ability to continue as a going concern, disclosing, as applicable, matters related to going concern;

• use the going concern basis of accounting unless they either intend to liquidate the OFSOs or to cease operations, or have no realistic alternative but to do so; and

• submit the financial statements and report to the Guernsey Committee for Economic Development (the "Committee") and the Jersey Minister for Sustainable Economic Development, (the "Minister") not later than 4 months after the end of each financial year.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the OFSOs' transactions and disclose with reasonable accuracy at any time the financial position of the OFSOs and enable them to ensure that the financial statements comply with the Financial Services Ombudsman (Bailiwick of Guernsey) Law 2014 and the Financial Services Ombudsman (Jersey) Law 2014. They are responsible for such internal control as they determine is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the OFSOs and to prevent and detect fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the OFSOs' website. Legislation in Guernsey and Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

CHANNEL ISLANDS FINANCIAL OMBUDSMAN 3 REPORT OF THE DIRECTORS - CONTINUED

for the year ended 31 December 2025

PRINCIPAL ACTIVITY

The OFSOs' primary function is to ensure that complaints about financial services are resolved:

• independently, and in a fair and reasonable manner;

• effectively, quickly, with minimum formality, and so as to offer an alternative to court proceedings that is more accessible for complainants; and

• by the most appropriate means, whether by mediation, referral to another forum, determination by an Ombudsman or in any other manner.

RESULTS

The Statement of Income and Retained Earnings for the year is set out on page 7. DIRECTORS

The directors who held office during the year were: Antony Townsend - Chair

Robert Girard

Jennifer Carnegie - resigned 31.12.2025 Hayley North

DISCLOSURE OF INFORMATION TO THE AUDITOR

Each of the persons who are directors at the time when this Report of the Directors is approved has confirmed that:

• so far as that director is aware, there is no relevant audit information of which the OFSOs auditor is unaware; and

• that director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the OFSOs auditor is aware of that information.

INDEPENDENT AUDITOR

RSM Channel Islands (Audit) Limited was appointed as auditor on 29 June 2020. This report was approved by the board on 15 April 2026 and signed on its behalf.

Director

Opinion

We have audited the financial statements of the Channel Islands Financial Ombudsman (the  "Body Corporate"), which comprise the statement of financial position as at 31 December 2025, and the statement of comprehensive income, and statement of cash flows for the year then ended, and notes 1 to 13 to the financial statements, including a summary of significant accounting policies.  The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards.

In our opinion the financial statements:

• give a true and fair view of the state of affairs of the Body Corporate a s at 31 December 2025 and of its results for the year then ended;
• have been properly prepared in accordance with United Kingdom Accounting Standards; and
• have  been  prepared  in  accordance  with  the Financial  Services  Ombudsman  (Jersey)  Law  2014  and  Financial Services Ombudsman (Bailiwick of Guernsey) Law 2014.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)') and applicable law. Our responsibilities under those standards are further described in the  Auditor's responsibilities for the audit of the financial statements section of this report. We are independent of the Body Corporate in accordance with the ethical requirements that are relevant to our audit of the financial statements in Jersey and Guernsey, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Body Corporate's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information, which comprises the Report of the Directors. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusions thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements of this other information, we are required to report that fact.

We have nothing to report in this regard.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the terms of our engagement require us to report to you if, in our opinion:

• adequate accounting records have not been kept; or
• the financial statements are not in agreement with the accounting records and returns; or
• we have not received all the information and explanations we require for our audit.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page 2, the directors are responsible for the preparation of the financial statements in accordance with United Kingdom Accounting Standards and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

STATES OF JERSEY (THE "MINISTER") AND THE COMMITTEE FOR ECONOMIC DEVELOPMENT OF THE STATES OF GUERNSEY (THE "COMMITTEE") (continued)

Responsibilities of directors (continued)

In preparing the financial statements, the directors are responsible for assessing the Body Corporate's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Body Corporate or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than the one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain  an  understanding  of  internal  control  relevant  to  the  audit  in  order  to  design  audit  procedures  that  are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Body Corporate's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Cody Corporate's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of  our auditors' report. However, future events or conditions may cause the Body Corporate to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair

presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

The extent to which the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is explained below.

The  objectives  of  our  audit  are  to  obtain  sufficient  appropriate  audit  evidence  regarding  compliance  with  laws  and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements, to perform audit procedures to help identify instances of non-compliance with other laws and regulations that may have a material effect on the financial statements, and to respond appropriately to identified or suspected non-compliance with laws and regulations identified during the audit.

In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements  due  to  fraud,  to  obtain  sufficient  appropriate  audit  evidence  regarding  the  assessed  risks  of  material misstatement due to fraud through designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit.

INDEPENDENT AUDITORS' REPORT TO THE MNISTER FOR SUSTAINABLE ECONOMIC DEVELOPMENT OF THE STATES OF JERSEY (THE "MINISTER") AND THE COMMITTEE FOR ECONOMIC DEVELOPMENT OF THE STATES OF GUERNSEY (THE "COMMITTEE") (continued)

The extent to which the audit was considered capable of detecting irregularities, including fraud (continued)

However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the Body Corporate's operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.

We obtained an understanding of the legal and regulatory frameworks that the Body Corporate operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. These included compliance with Financial Services Ombudsman (Jersey) Law 2014 and Financial Services Ombudsman (Bailiwick of Guernsey) Law 2014

Our testing included:

• enquiries of management regarding known or suspect instances of non-compliance with laws and regulations;
• enquiries of management regarding known or suspect instances of irregularities, including fraud;
• undertaking analytical procedures to identify unusual or unexpected relationships;

review of minutes of Board meetings throughout the period;

testing the appropriateness of journal entries and other adjustments;  

• agreement of the financial statements disclosures to underlying supporting documentation.

Owing to the inherent limitations of an audit there is an unavoidable risk that some material misstatement of the financial statements may not be detected, even though the audit is properly planned and performed in accordance with ISAs (UK). However, the principal responsibility for ensuring that the financial statements are free from material misstatement, whether caused by fraud or error, rests with the directors who should not rely on the audit to discharge those functions.

In addition, as with any audit, there remains a higher risk of non-detection of fraud, as this may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. Our audit procedures are designed to detect material misstatement. We are not responsible for preventing non-compliance or fraud and cannot be expected to detect non-compliance with all laws and regulations.

Use of our report

This report is made solely to the Minister and the Committee, in accordance with Schedule 2 Article (4)(1)(5)(a) of the Financial  Services  Ombudsman  (Jersey)  Law  2014  and  Schedule  1(5)(4)(a)  of  the  Financial  Services  Ombudsman (Bailiwick of Guernsey) Law 2014 respectively. Our audit work has been undertaken so that we might state to the Minister and the Committee those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Body Corporate, the Minister and the Committee, for our audit work, for this report, or for the opinions we have formed.

Phil Crosby

For & on behalf of

RSM Channel Islands (Audit) Limited Chartered Accountants

Jersey, C.I.

15 April 2026

STATEMENT OF INCOME AND RETAINED EARNINGS for the year ended 31 December 2025

Notes 2025 2024 GBP GBP

Revenue 3 1,684,813  1,479,833

Gross surplus 1,684,813  1,479,833 Administrative expenses 4 (1,463,251) (1,249,626)

Operating surplus  221,562  230,207 Interest receivable 19,247  7,443

Surplus for year 240,809  237,650 Retained earnings brought forward 717,536  479,886

Retained earnings carried forward 958,345  717,536

All the items dealt with in arriving at the above results relate to continuing operations.

The accompanying notes on pages 10 to 21 form an integral part of these financial statements.

STATEMENT OF FINANCIAL POSITION

as at 31 December 2025

Notes 2025 2024

GBP GBP GBP GBP

Fixed assets

Intangible assets 5 3,473  7,831 Tangible assets 5 3,476  5,281

6,949  13,112

Current assets

Unbilled case fees 6 150,150  79,600 Debtors and prepayments 7 24,343  21,350 Cash and cash equivalents 8 833,824  652,846

1,008,317  753,796

Creditors: Amounts falling due within one year

Creditors and accruals 9 56,921  49,372

56,921  49,372

Net current assets 951,396  704,424 Net assets 958,345  717,536

Capital and reserves

Accumulated surplus 11 958,345  717,536

958,345  717,536

The financial statements were approved and authorised for issue by the board and were signed on its behalf on 15 April 2026.

Director

The accompanying notes on pages 10 to 21 form an integral part of these financial statements.

STATEMENT OF CASH FLOWS for the year ended 31 December 2025

Notes 2025 2024 GBP GBP

Cash flows from operating activities

Surplus for year 240,809  237,650 Adjustments for:

Interest receivable (19,247) (7,443) Depreciation / amortisation 5  6,163  8,290 (Increase) in unbilled case fees (70,550) (4,000) (Increase)/decrease in debtors and prepayments (2,993) 764 Increase/(decrease) in creditors and accruals 7,549  (579)

Net cash generated from operating activities 161,731  234,682 Cash flows from investing activities

Purchase of tangible assets 5  - (4,026) Interest received 19,247  7,443

Net cash generated from investing activities 19,247  3,417 Net increase in cash and cash equivalents 180,978  238,099 Cash and cash equivalents at the beginning of the year 652,846  414,747 Cash and cash equivalents at the end of the year 833,824  652,846 Cash and cash equivalents at the end of the year comprise:

Cash and cash equivalents 8 833,824  652,846 Net debt reconciliation

Cash and cash equivalents

Cash

Overdrafts

Cash equivalents

As at 1 Jan 2025

GBP

652,846

-

-

652,846

Cash flows

GBP

180,978

-

- 180,978

As at 31 Dec 2025

GBP

833,824

 -

 - 833,824

The accompanying notes on pages 10 to 21 form an integral part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2025

10

1. Accounting policies

A summary of the principal accounting policies, all of which have been consistently applied throughout the period, and the preceding year, is set out below.

1. Basis of preparation of financial statements

The financial statements of the Channel Islands Financial Ombudsman are the combined financial statements of the Office of Financial Services Ombudsman Guernsey and the Office of the Financial Services Ombudsman Jersey, referred to in the body of the financial statements as the OFSOs.

The financial statements have been prepared on the historical cost basis and in accordance with United Kingdom Accounting Standards including Financial Reporting Standard 102 ("FRS 102"), the Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland.

The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the OFSOs' accounting policies (see note 2).

2. Going concern

The OFSOs continue to adopt the going concern basis in preparing their financial statements for the following reasons:

• All statutory aspects of the mandate are in place making the OFSOs mandatory;

• There is statutory ability to levy industry to cover operating costs;

• There is a strong cash position and prudent operating reserves;

• Case files and associated case fee income are in line with expectations; and

• As regards the pan-Channel Islands joint operation of the OFSOs, there is a Memorandum of Understanding in place between the Guernsey Committee for Economic Development and the Jersey Minister for Sustainable Economic Development.

3. Revenue

The intent under-pinning the design of the OFSOs funding regime is to charge on a basis that is transparent, fair and simple to administer.

The Financial Services Ombudsman (Case-fee and Levies) (Bailiwick of Guernsey) Order 2015, as amended by the Financial Services Ombudsman (Case-fee and Levies) (Bailiwick of Guernsey) (Amendment) Order 2018 and the Financial Services Ombudsman (Case-fee and Levy) (Jersey) Regulations 2015, as amended by the Financial Services Ombudsman (Case-fee, Levy and Budget- Amendments) (Jersey) Regulations 2018, provided for the OFSOs to prescribe schemes for case fees and levies to be paid by certain financial services providers in respect of the expenses of the OFSOs.

NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2025

11

1 Accounting policies - continued

1.3 Revenue - continued Sources of revenue

The principal sources of revenue are annual levies and case fees. Annual levy

The detail regarding the levies for 2025 is set out in the Financial Services Ombudsman Levy Scheme (Bailiwick of Guernsey) 2025 (the '2025 Guernsey Levy Scheme') and the Financial Services Ombudsman Levy Scheme (Jersey) 2025 (the '2025 Jersey Levy Scheme'). The detail regarding the levies for 2024 is set out in the Financial Services Ombudsman Levy Scheme (Bailiwick of Guernsey) 2024 (the '2024 Guernsey Levy Scheme') and the Financial Services Ombudsman Levy Scheme (Jersey) 2024 (the '2024 Jersey Levy Scheme').