Small Business Ombudsman Access.
The Financial Conduct Authority (FCA) has launched a consultation to give more small businesses access to the Financial Ombudsman Service (FOS, the Ombudsman).
Currently, only consumers and ‘micro’ businesses have Financial Ombudsman rights, making it difficult for other smaller and medium sized businesses to take action on mis-selling of financial products or loans or other finance related product given that their only recourse is through the courts, which can be costly.
Definitions of business (by size):
Small Businesses Proposal
The FCA proposes allowing small businesses access to Financial Ombudsman rights, that’s approximately 160,000 additional small business enterprises, charities and trusts, in addition to the 5.5 million micro businesses that already have ombudsman rights.
They propose to change the eligibility criteria to access the Ombudsman, so businesses with fewer than 50 employees, annual turnover below £6.5 million and an annual balance sheet (i.e. gross assets) below £5 million become eligible.
The consultation ends in April with final proposals to be published in October. We believe it is always a good thing to prevent mal-practice for small and micro-business but we ask yet again, who will carry the additional costs burden? Not the public, it is hard pressed ‘micro’ financial services firms such as ourselves that fund the Ombudsman service by yearly levy.