New Financial Ombudsman Service rules from 1 April 2019 – Widening access for SMEs and increased award limit

From the 1 April 2019, the Financial Conduct Authority (“FCA”) is introducing new rules to expand the jurisdiction of the Financial Ombudsman Service (“FOS”). These new rules will enable FOS to deal with complaints made by Small and Medium Enterprises (“SMEs”). With the high-profile mistreatment of SMEs by large banks in recent years, this is a welcome additional route to compensation for those businesses.

What is the Financial Ombudsman Service?

The FOS is an independent body established by the government to specifically deal with complaints against the financial services industry. As a service, they are impartial and fair to both sides of a dispute. Their approach to claims is inquisitorial. This means they will request information from each side and investigate the merits of any claim based on what information they receive. It is therefore important to make a full and detailed submission to the FOS and in order to do so, we recommend seeking the assistance of a specialist legal adviser.

The time limit for making a submission to the FOS is, as outlined on their website, as follows:

1. Six months from the business sending you a final response (which has to mention the six-month time limit); and

2. Six years from the event you are complaining about (or – if later – three years from when you knew, or could reasonably have known, you had cause to complain).

There are also special time limitation rules for certain categories of complaints such as endowment policies and PPI claims.

The time limits can only be extended if the business voluntarily agrees or if there are “exceptional circumstances”, which can be a difficult threshold to pass. If you wish to pursue your claim, it is therefore important to make your submission to the FOS as soon as possible after receiving a final response from the business, in order to protect your position.

What are the new rules?

The main changes relate to eligibility to make a complaint, and the increasing of the cap on compensation. When the new rules take effect, the maximum amount that can be awarded by FOS rises from £150,000 to £350,000. Previously, a business could only make a FOS complaint if they employed fewer than 10 people, and had a turnover or annual balance sheet that did not exceed €2 million. Under the new rules, SMEs can make a FOS complaint if they meet the below criteria:

1. They must have an annual turnover of less than £6.5 million; and

2. Employ fewer than 50 people; or

3. Has a balance sheet total of less than £5 million

How can Ellis Jones help you?

If you would like to discuss a potential claim against a financial institution such as a bank, financial advisors, and insurance companies, please do not hesitate to contact our expert Banking and Finance Litigation Solicitors. We have substantial experience in assisting SMEs with their claims or complaints against financial institutions and dealing with submissions to the Financial Ombudsman Service. To date, we have recovered in excess of £55 million from UK Banks for our clients. We are also
prepared to consider acting on a No Win No Fee basis, subject to eligibility and initial assessment of your claim.

Please contact William Fox Bregman, Partner and Head of Banking and Finance Litigation on 01202 057740 or send an email enquiry to discuss your claim.