The FCA and the Financial Ombudsman Service (FOS) have jointly published a consultation paper (CP18/31) on increasing the award limit for the FOS. The proposed increases apply to the FOS’s compulsory and voluntary jurisdictions. The FCA and FOS propose that, on 1 April 2019, the FOS’s £150,000 award limit should change to:
- £350,000 for complaints about acts or omissions by firms on or after 1 April 2019;
- £160,000 for complaints about acts or omissions before 1 April 2019 (to reflects changes in inflation since the £150,000 limit was put in place); and
- both award limits should be automatically adjusted on 1 April from 2020 onwards, using the consumer prices index (CPI), with the adjusted figure rounded down to the nearest £5,000.
The FCA and FOS do not expect firms’ ongoing complaint handling costs to change because of their proposals; however, it will clearly increase the amount of compensation the FOS can award. The FCA asks specifically for feedback on the interaction of this proposal with its plans to extend the scope of the FOS to small and medium-sized enterprises’ (SMEs) (see next item below).
The consultation closes on 21 December 2018 and the FCA intends to publish a policy statement early in March 2019.