Smaller businesses to have wider access to the Financial Ombudsman Services
17 October 2018
If you are an employer with fewer than 50 employees and an annual turnover of less than £6.5m or an annual balance sheet smaller than £5m, the Financial Conduct Authority (FCA) has confirmed that plans are in place to extend access to the Financial Ombudsman Service. Businesses would be able to refer unresolved complaints to the Financial Ombudsman Service (FOS) and secure compensation from next April. This has come about after a string of scandals prompted calls for stronger regulation of business banking.
The criteria for access to the service have been amended so that small and medium-sized enterprises (SMEs) must only meet the turnover test and one of either the headcount or balance sheet total tests, not all three tests as was previously proposed.
The FCA says it made this change in response to the feedback that applying all three tests “would unfairly exclude certain types of SME, for example, those with a relatively low turnover but 50 or more employees.”
Andrew Bailey, chief executive of the FCA, said: “We recognise it is vitally important for SMEs to have a mechanism to resolve disputes and we are clear the Financial Ombudsman Service is the right route for this.
“The changes we are making are as far as we think we should go within our powers, but they will provide access to the ombudsman service for a significant number of smaller businesses.
“Before this, their only option was potentially a costly legal one through the courts.
“The changes are an important extension of the ombudsman service’s role and remit.
“We will work closely with them to ensure that they are ready so that SMEs are able to benefit from the new rules as soon as they come into force.”
Together with the near-final rules, the FCA has published a consultation on raising the maximum amount of compensation the ombudsman service can require financial services firms to pay out from £150,000 to £350,000.