The maximum amount that can be awarded by the Financial Ombudsman Service (FOS) has sharply increased this week from £150,000 to £350,000 (in respect of new claims), and is set to rise in line with inflation from now on. The Financial Conduct Authority (FCA) has stated that the increase reflects the need to address “the very significant financial harm” that the lower limit could cause to ‘high value’ complainants. They have linked it to the FOS’s expanded remit, which will now allow small and medium sized enterprises, as well as individuals, to refer claims to the Ombudsman.
The short period between the announcement of the changes on 8 March 2019, and their implementation, has led to criticisms that firms have been left unable to re-confirm their professional indemnity insurance in time. However, the FCA has stated that they are unwilling to delay the changes.
The FCA has estimated that approximately 500 cases per year may be impacted by the changes. It may also result in a reduction in subsequent Court action taken by claimants for losses that go beyond the current £150,000 limit, as they many more will now be able to recover their full losses via the FOS.
How Nelsons Can Help
Cathryn Selby is a Partner in our Dispute Resolution team.
If you would like further advice in relation to this subject, please contact one of our team on 0800 024 1976 or contact us via our online form.