The Financial Conduct Authority (FCA) has confirmed that it intends to go ahead with its proposals to:
- increase the Financial Ombudsman Service (FOS) award limit; and
- extend the definition of an eligible complainant to include larger small and medium-sized enterprises (SMEs).
The current FOS award limit of £150,000 will change to:
- £350,000 for complaints about acts or omissions by firms on or after 1 April 2019; and
- £160,000 for complaints about acts or omissions by firms before 1 April 2019, and which are referred to the ombudsman service after that date.
Any complaints referred to the ombudsman service before 1 April 2019, will not get the benefit of the increased award limits and will remain capped at £150,000.
The new limits will apply from 1 April 2019 and will be automatically adjusted on 1 April each year to ensure that they keep pace with inflation, as measured by the Consumer Price Index (CPI) for the preceding January. The inflation-adjusted limit would be rounded down to the nearest £5,000.
What should firms be doing now?
Firms should be:
- updating their Complaints Policy;
- ensuring that complaint handling staff are aware of the increased limits and wider eligibility criteria;
- updating consumer-facing information about complaint handling procedures; and
- ensuring that the most recent version of the FOS standard explanatory leaflet is sent to client where appropriate.
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