FOS compensation limits increased
FCA has announced that FOS compensation limits will increase. The current limit is £150,000 and this will rise to £350,000. This change will become effective on 1st April and apply to all actions that happen after that date. For complaints raised with FOS after the effective date that relate to earlier actions, the compensation limit will rise to £160,000. This increase in potential penalty puts further onus on firms to act in customers’ best interests.
In addition, FOS is extending its jurisdiction to allow more firms to use the service. Previously only businesses with a turnover or annual balance sheet of less than 2m euros and employing less than 10 people were eligible to complain through the ombudsman. The ‘Eligible Complainant’ definition will change to include enterprises with an annual turnover of under £6.5 million and an annual balance sheet total of under £5 million or fewer than 50 employees. This move extends the service to a far greater number of firms who can now seek recourse against detriment from their financial services provider.