The Financial Conduct Authority (FCA) and the Financial Ombudsman Service jointly issued the Consultation Paper 18/31: Increasing the award limit for the Financial Ombudsman Service (CP18/31).
This consultation outlines the proposals to increase the award limit for the Financial Ombudsman Service’s (‘the ombudsman service’) Compulsory Jurisdiction (CJ). The FCA notes the proposals will make sure more complainants receive fair compensation when the ombudsman service upholds their complaint against a financial services firm. The ombudsman service proposes to mirror the proposed changes to the CJ in the Voluntary Jurisdiction, which it oversees.
On 1st April 2019, the FCA proposes that the ombudsman service’s £150,000 award limit should change to:
- £350,000 for complaints about acts or omissions by firms on or after 1st April 2019.
- £160,000 for complaints about acts or omissions by firms before 1st April 2019, and which are referred to the ombudsman service after that date.
This 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.
From 1st April 2020 onwards, the FCA propose that both award limits should be automatically adjusted on 1st April, using the CPI for the preceding January. The inflation‑adjusted limit would be rounded down to the nearest £5,000.
For any complaints referred to the ombudsman service before 1st April 2019 the limit will remain at £150,000.
The deadline for comment on this consultation paper is 21st December 2018. The FCA aims to publish a Policy Statement containing final rules in March 2019.
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Please Note: This publication is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying the information contained in this publication to specific issues or transactions.