From 1 April 2019, the amount of compensation that the Financial Ombudsman Service (FOS) can require financial services firms to pay in compensation to consumers and business that make complaints has increased.
The limit on compensation that FOS could require a firm to pay was set at £150,000 in January 2012. From 1 April 2019, this limit increases to £350,000 for complaints about acts or omissions by firms which took place on or after that date. The increase has come about following the Financial Conduct Authority’s Consultation CP18/31.
The increase will be welcomed by many financial services customers who wish to pursue firms for losses suffered as a result of negligent advice and for the mis-selling of financial products.
The change is significant as an award by FOS can be enforced in the same way as a court order.
What does this mean in practise?
It seems likely that this change will result in more complaints being referred to FOS for determination that might otherwise have been pursued through the civil courts. However, this begs the question; how will FOS cope with an increase in demand for its services?
FOS had already reported a 15% increase in complaints between 2017/2018 and 2018/2019. Further, many claimants are already experiencing long delays and, in some cases, are waiting years for even a preliminary decision.
In the absence of additional resources, there must be a danger that FOS will take longer to deal with cases meaning some may still decide to take their higher value cases to court.
If you have been mis-sold a pension, investment or mortgage, contact Hugh James’s Financial Mis-Selling Team for specialist advice on how you might recover your money.