The Financial Conduct Authority (FCA) has this week published new rules that will see the Financial Ombudsman Service (FOS) award limit rise from £150,000 to £350,000 as of April 1.
Any complaints lodged against firms after this date will be eligible for a larger amount of compensation – while any submitted prior will have their limits capped at £160,000. The FCA has also confirmed that both award limits will be automatically adjusted every year to ensure they keep pace with inflation.
As such, regulated firms should ensure they meet the requirements, which include;
Updating consumer-facing information about complaints-handling procedures
Using the most recent version of the ombudsman service’s standard explanatory leaflet
Briefing complaint-handling staff on the increased limits
Under the DISP complaints-handling rules, businesses which are covered by the ombudsman must give consumers the FOS leaflet at the appropriate stage of the complaints procedure. These are when issuing a final response to a complaint or if you have run out of time and aren't yet in a position to send your final response.
Where a customer has referred their concerns to you by email, you may prefer to email them a hypertext link to the version of the FOS consumer leaflet on their website – rather than posting them a printed version.
In this case, you should still remind them that you can post a hard-copy of the leaflet if they would prefer. It’s important to note that you cannot send consumers photocopies or hard-copy print-outs of the FOS consumer leaflet. They must be original, and ordered online.
The new award limit comes into force at the same time as the extension of the service to larger small and medium-sized enterprises (SMEs), which are classified as firms with an annual turnover of under £6.5 million, an annual balance sheet total of under £5 million, or fewer than 50 employees.
As a result, an additional 210,000 SMEs will be eligible to complain to the Financial Ombudsman Service. Unsurprisingly, the FCA strongly recommends that Policy Statement PS19/8 is read and understood prior to April 1.