Britain's financial watchdog, the Financial Conduct Authority (FCA), has confirmed that the Financial Ombudsman Service will, as of next month, be able to require financial services firms to pay significantly more compensation to smaller companies and individuals.
From 1 April, the current £150,000 limit will increase to £350,000 for complaints about actions by firms on or after that date. For complaints about actions before 1 April that are referred to the Financial Ombudsman Service after that date, the limit will rise to £160,000.
The FCA also confirmed that both limits are to be automatically adjusted every year to ensure they keep pace with inflation.
The new compensation limits will come into force at the same time as the extension of the service to larger small and medium-sized enterprises (SMEs). SMEs are defined as companies with fewer than 50 employees, annual turnover of less than £6.5m and an annual balance sheet total of under £5m. The move will allow an additional 210,000 SMEs to lodge complaints with the Financial Ombudsman Service.
Commenting on the development, Andrew Bailey, chief executive of the FCA, said: "Consumers and small businesses struggle with the cost and time needed to take firms to court, so it is essential they can receive fair compensation from the Financial Ombudsman Service when things go wrong.
"We have listened carefully to the feedback we have received and believe our approach is right and will bring benefits to both the consumers and micro-enterprises currently eligible for the ombudsman service and the small businesses who will become eligible in April."