Coleman (pictured), a former chief executive officer of The Co-operative Bank, will take up the role on 10 October, succeeding Baroness Zahida Manzoor, who steps down after two terms covering six years in the post.

The appointment was made by the Financial Conduct Authority, which has the power to fill this post, with approval from the Treasury. 

The Financial Conduct Authority said Coleman will chair the Financial Ombudsman’s board until a permanent appointment is made, “after the initial recruitment campaign proved unsuccessful”.   

In a 30-year career in financial services, Coleman has also worked as deputy group treasurer and group head of capital management at The Royal Bank of Scotland and group director of treasury at Nationwide Building Society. 

The Financial Ombudsman Service, like several regulators, is under pressure to relax regulations to fall in line with the government’s growth agenda.   

Earlier this month, Economic Secretary to the Treasury Emma Reynolds completed a review into the Financial Ombudsman Service to ensure it does not act like a “quasi-regulator” and has a greater level of deference to the FCA.   

As a result of the review, the Financial Conduct Authority and the Financial Ombudsman Service will work together on high-volume complaints between consumers and firms to cut the time it takes to settle disputes. 

The regulators will also work together “on specific or novel issues [that] can jam the system and cause significant delays”. 

The move comes after UK Finance, among other bodies, had called for reform of the Financial Ombudsman Service after routinely making “decisions that go beyond FCA rules create legal uncertainty”. 

FoS also confirmed that the interest applied to some awards it directs firms to pay will be cut to track the Bank of England’s base average rate plus-1%. 

This falls from the previous rate of 8%, which had remained unchanged for almost 25 years. 

The Financial Ombudsman adds that it “plans to consult later this summer on different levels of case fees for financial firms, to make the system fairer and support early resolution”.   

Also, this month, the Treasury Committee released a report, which said that the departure of the former Financial Ombudsman Service chief executive Abby Thomas in February was due to a “collapse in confidence following fundamental disagreements with the board on strategy, management and operations”.    

The committee also criticised Baroness Manzoor, who it said was “disrespectful” when she “refused to answer questions on the departure of the chief executive” when she appeared before the committee, also in February.   

Treasury Committee chair Dame Meg Hillier said: “I’m afraid that the handling of this situation by the senior leadership of the Financial Ombudsman Service has been deeply disappointing.    

“The attempt to frustrate a House of Commons Committee from scrutinising the actions of a publicly accountable organisation ultimately proved unsuccessful.  

“I hope this sends a clear message to any organisation considering similar action in future that Members of the House of Commons will have answers to the questions they ask on behalf of the British public, whether senior officials attempt to block them or not.” 

Financial Conduct Authority chair Ashley Alder welcomed the experience Coleman brings to the role. 

Alder said: “I am delighted that someone with Liam’s depth of experience will lead the Financial Ombudsman’s board during what is a pivotal time for the organisation.” 

Coleman added: “I look forward to working closely with the board, executive team, and our wider stakeholders – including the Treasury and the FCA.”   

Day-to-day operations at the Financial Ombudsman Service are led by interim chief ombudsman James Dipple-Johnstone and interim chief executive Jenny Simmonds.