On 24 October 2023, the FCA published Feedback Statement FS23/5: Findings of review of rules extending small and medium-sized enterprises (SME) access to the Financial Ombudsman Service (FOS). FS23/5 sets out the FCA’s findings on whether the thresholds for SMEs to be able to refer complaints to the FOS remain appropriate.
The FCA made rules in 2018 which extended access to the FOS for more SMEs. These rules came into force on 1 April 2019. Following the implementation of these new rules, the FCA said that it would review the impact of the rules within two years of them coming into force. The review was launched with a call for input (CFI) in March 2023.
In carrying out the review, the FCA wanted to understand whether the eligibility criteria for SMEs to be able to refer complaints to the FOS remain appropriate to its policy objective. This objective is to provide access to the FOS for SMEs that are unlikely to have sufficient resources to resolve disputes with financial services firms through the legal system.
FS23/15 includes a summary of responses received to the CFI, the current thresholds, whether the rules have captured the businesses the FCA expected them to, and whether the FCA considers that the current criteria remain appropriate.
In light of the feedback received, the FCA confirms in FS23/15 that:
- Its policy objective remains the same as when it made the rules extending access to the FOS. This is to provide access to SMEs it thinks are likely to have insufficient resources to resolve disputes with financial services firms through the legal system.
- Setting the eligibility thresholds for this is a matter of judgement. The FCA remains of the view which it shared when it made the rules that, in general, larger SMEs will have the bargaining power, organisational resources and understanding of financial services to protect their interests in disputes with firms.
- When the FCA made the rules, it decided that small businesses should be able to complain to the FOS about acts or omissions that occurred on or after 1 April 2019. In line with the general presumption that the rules should not have retrospective effect, the FCA is satisfied this remains appropriate and therefore is not minded to enable small businesses to complain about acts or omissions occurring before 1 April 2019.
- The FCA considers that, overall, the threshold criteria for SMEs to be able to refer complaints to the FOS remain appropriate.