The UK’s Financial Conduct Authority (FCA) has said it will push forward with granting SMEs access to its dispute resolution arm, the Financial Ombudsman Service (FOS).
The FCA – which sets the FOS’s oversight and principles, but does not otherwise intervene in its operations – said it had now published “near-final rules” for extending the Ombudsman’s remit, expected to come into effect in April of next year.
The watchdog said it was also consulting on raising the maximum compensation from £150,000 (€171,000) to £350,000 – despite FOS chief Caroline Wayman telling Parliament’s Treasury Committee in July that an awards rise was not part of the discussions.
Earlier this year, the FOS was embroiled in a complaint mishandling scandal, after a TV exposé showed ombudsmen rushing through cases under what they said had been an increasingly heavy workload, particularly in the aftermath of the PPI controversy.
The Treasury Committee subsequently expressed doubts about the FOS’s preparedness for business finance complaints. In Tuesday’s statement, the FCA said it had taken “practical steps” to assist the FOS with the expansion, including through the “recruitment of additional staff with the skills and experience required”.
“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,” said Andrew Baily, FCA chief executive. “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.”