Substantial increase in Financial Ombudsman Service Awards Limit
The FCA has indicated that it intends to increase the limit of an award which can be made by the Financial Ombudsman Service under its compulsory jurisdiction scheme from £150,000 to £350,000.
This is an unwelcome development for asset financiers given that the FOS is not required to make decisions strictly in accordance with the law. DISP 3.6.4R of the FCA Handbook provides:“In considering what is fair and reasonable in all the circumstances of the case, the Ombudsman will take into account:
(a) law and regulations;
(b) regulators’ rules, guidance and standards;
(c) codes of practice; and
(2) (where appropriate) what he considers to have been good industry practice at the relevant time”.
Asset financiers therefore face a theoretical risk of a binding award up to £350,000 without having committed any wrongdoing in law.
The proposal is currently under consultation but it is understood that the FCA would like to implement this during 2019.
In addition, as from 1 April 2019 the categories of eligible complainants under the scheme are being extended to include more SMEs and individual guarantors of loans.