On 16 October 2018, there was published Consultation Paper 18/31: Increasing the award limit for the Financial Ombudsman Service (CP18/31).
CP18/31 sets out proposals to increase the award limit for the Financial Ombudsman Service’s (FOS) compulsory jurisdiction (CJ). It states that the proposals will ensure that more complainants receive fair compensation when the FOS upholds their complaint against a financial services firm. The FOS proposes to mirror the proposed changes to the CJ in the voluntary jurisdiction which it oversees. As such CP18/31 is issued jointly by the FCA and the FOS.
Specifically it is proposed that on 1 April 2019, the FOS’ £150,000 award limit should change to:
- £350,000 for complaints about acts or omissions by firms on or after 1 April 2019; and
- £160,000 for complaints about acts or omissions by firms before 1 April 2019, which are referred to the FOS after that date. This is so that the limit for these complaints reflects changes in inflation, as measured by the Consumer Prices Index (CPI), since the £150,000 limit was put in place in 2012.
The FCA proposes that, from 1 April 2020 onwards, both award limits should be automatically adjusted on 1 April, using the CPI for the preceding January. The inflation-adjusted limit would be rounded down to the nearest £5,000. Further discussion how this will work is in chapter 3 of CP18/31.
For any complaints referred to the FOS before 1 April 2019 the limit will remain at £150,000.
The deadline for comments on CP18/31 is 21 December 2018. The FCA expects to publish a Policy Statement containing final rules in early March 2019.