The regulator revealed that its proposals could add between £1.11m and £7.54m in redress paid to newly-eligible SMEs per year. This in turn could affect the levy paid by advisers.
However, it highlighted that certain sectors, particularly insurance were more likely to be affected by the change.
The FCA’s proposals will include small and medium enterprises under the FOS redress scheme based on three criteria:
- annual turnover of less than £6.5m
- annual balance sheet total of less than £5m
- fewer than 50 employees.
It suggested this would give a further 160,000 SMEs access to the FOS.
As long as a complainant is eligible, the Ombudsman can consider complaints about any regulated activity; it can also consider complaints about some unregulated activities, such as, lending to companies or the activities of business turnaround units.
The FCA also proposes to extend eligibility to personal guarantors of corporate loans, provided the borrowing business also meets the eligibility criteria.
At the moment only individual consumers and around 5.5 million micro-enterprises can access the Ombudsman if they have a dispute with a financial services firm.
Court action not realistic
FCA chief executive Andrew Bailey (pictured) said: “It is important for everyone, including financial services firms, that there is an effective dispute resolution mechanism for businesses.
“Our evidence suggests some small businesses currently find it hard to achieve a fair outcome in disputes with financial services firms because court action is not a realistic option for them.
“We have considered what could be done within our powers and the remit of the Financial Ombudsman Service to improve this situation and are proposing to expand access to the Ombudsman.”