You are here: Home - News -

Maximum FOS customer compensation limit set to more than double to £350,000

by:
  • 16/10/2018
  • 0
Maximum FOS customer compensation limit set to more than double to £350,000
Financial firms could be told to pay up to £350,000 in compensation by the Financial Ombudsman Service (FOS), under new limits proposed by the Financial Conduct Authority (FCA).

 

The regulator has proposed increasing the maximum payout from its current limit of £150,000 in a consultation that runs until December 21.

Compensation will also be increased in line with inflation from April 2020, under the plans.

Any complaints referred to the ombudsman service before April 2019 will be subject to the limit of £150,000.

It’s thought there are around 2,000 complaints upheld by the ombudsman service each year where the amount of compensation the service determines is due is above the current award limit, the FCA said.

As a result, complainants could be losing out to the tune of around £113m a year.

 

FOS service rolled out to small businesses

The FCA has also confirmed plans to extend access to the FOS to more small and medium-sized firms, providing hundreds of thousands of firms an alternative route to court to seek redress.

It means small businesses with an annual turnover below £6.5m and fewer than 50 employees, or a balance sheet lower than £5m, will be able to refer complaints to the ombudsman.

Under the ‘near-final’ rules published today around 210,000 SMEs will be able to complain and get compensation.

Andrew Bailey, chief executive of the FCA said: “We recognise it is vitally important for SMEs to have a mechanism to resolve disputes and we are clear the Financial Ombudsman Service is the right route for this.

“The changes we are making are as far as we think we should go within our powers, but they will provide access to the ombudsman service for a significant number of smaller businesses. Before this their only option was potentially a costly legal one through the courts.

“The changes are an important extension of the ombudsman service’s role and remit.  We will work closely with them to ensure that they are ready, so that SMEs are able to benefit from the new rules as soon as they come into force.”

Final rules are expected to come into force in April next year.

The ombudsman service is to start taking practical steps towards putting the extension of its remit in place, including starting recruitment of additional staff with the skills and experience required, the FCA said.

There are 0 Comment(s)

Comments are closed.

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
  • RT @robjupp: Great day yesterday for donations to @MortSleepOut. With Gift Aid, we are now close to £17,000. It would be great to get to £2…

Read previous post:
negative interest rates
Five-year fixed BTL rates hit record low – Moneyfacts

Average five-year fixed rates in the buy-to-let (BTL) market fell by 0.05% in just one month in October, hitting its...

Close