Compensation limit for financial complaints to increase to £350k
Consumers will be able to be awarded up to £350,000 in compensation when they complain to the financial watchdog from next month – an increase from the current maximum of £150,000.
At the moment, the Financial Ombudsman Service (FOS), which settles disputes between financial companies and their customers, can order firms to pay up to £150,000 if it upholds a complaint from a consumer.
However, the Financial Conduct Authority (FCA) says there are up to 500 complaints every year where the consumer is owed more than £150,000, meaning they could be left out of pocket – unless the firm voluntarily pays the extra compensation.
But under rules announced today, the ombudsman will be able to order firms to pay the new £350,000 maximum to consumers who have complaints upheld after Monday 1 April.
And the FCA says that the maximum compensation level will now be adjusted every year in line with inflation, as measured by the Consumer Prices Index.
For more info on complaining and your financial rights, see our Financial Ombudsman guide.
How are compensation amounts changing?
The maximum compensation you could be awarded depends on when you make your complaint, and when the issue you're complaining about took place:
- If you make a complaint before Monday 1 April, you could be awarded a maximum of £150,000.
- If you make a complaint on or after Monday 1 April about an issue that took place before that date, you could be awarded a maximum of £160,000.
- If you make a complaint on or after Monday 1 April about an issue that took place on or after that date, you could be awarded a maximum of £350,000.
At the moment, only consumers and micro-enterprises (ie, businesses with fewer than 10 employees) can be awarded compensation by FOS – but after Monday 1 April, small and medium-sized businesses, as well as charities, trusts and personal guarantors, will also be eligible.
What does the FCA say?
Andrew Bailey, chief executive of the FCA, said: "Consumers and small businesses struggle with the cost and time needed to take firms to court, so it is essential they can receive fair compensation from the Financial Ombudsman Service when things go wrong.
"We have listened carefully to the feedback we have received [from a 2018 consultation] and believe our approach is right and will bring benefits to both the consumers and micro-enterprises currently eligible for the ombudsman service and the small businesses who will become eligible in April."
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