On 16 October 2018, the Financial Conduct Authority (FCA) published ‘near-final’ rules confirming its intention to extend access to the Financial Ombudsman Service (FOS) to more small and medium-sized enterprises (SMEs).
What does this mean for SMEs?
Currently, the FOS only accepts complaints from “micro-enterprises”, which covers those businesses with an annual turnover of up to £2m and fewer than 10 employees.
The rules will allow for SMEs with an annual turnover below £6.5m to refer unresolved complaints to the FOS as long as they also have fewer than 50 employees or an annual balance sheet below £5m.
These changes provide access to services for an estimated 210,000 additional SMEs and have been strongly supported by respondents to the FCA’s January 2018 consultation. Many of whom wanted to see access to the FOS extended to larger SMEs, charities, trusts and a new category of personal guarantors.
When will the final rules be in place?
The ‘near-final’ rules have been published by the FCA to allow the FOS to begin taking practical steps to prepare for the extension of its scope, which will include recruiting additional staff with the necessary skills and experience.
The FCA intends to publish its final version of the rules later this year and the final rules are expected to come into force on 1 April 2019.
In addition to the near final rules, the FCA has published a consultation on raising the maximum amount of compensation that the FOS can require financial services firms to pay from £150,000 to £350,000 (for complaints about acts or omissions by firms on or after 1 April 2019) or £160,000 (for complaints about acts or omissions by firms before 1 April 2019, and which are referred to the FOS after that date). This consultation closes on 21 December 2018.
For help with Financial Ombudsman Services or advice on any financial disputes, please contact Darren Smith in our Dispute Resolution team on 0161 475 7652 or Anna Barnes, Head of Dispute Resolution, on 0161 475 7655.