The Financial Conduct Authority (FCA) has confirmed that the Financial Ombudsman Service (FOS) compensation limit will be increased to £375,000 from 1st April 2022.
What is the FOS?
The FOS is an independent complaints arbitration service between financial services firms and consumers or businesses.
What are the compensation limits?
For complaints made after 1 April 2022 for errors/omissions by the financial firm after 1st April 2019, the compensation limit increases to £375,000.
For complaints made after 1 April 2022 for errors/omissions by the financial firm before 1st April 2019, the compensation limit increases to £170,000.
More misery for financial services firms. Whilst the FOS estimates that only around 150 complaints per year would need compensation at the maximum award of £375,000, the reality is that professional indemnity insurance costs will increase, and no doubt financial services firms will need to increase their fees to cover these costs.
It is a travesty that financial firms cannot appeal against an ombudsman’s decision. No doubt there are many genuine complaints that need to be paid for but equally, there will be many complaints that are malicious, over inflated, or indeed false.