CP18/31: Increasing the award limit for the Financial Ombudsman Service

Open consultation: CP18/31
16/10/2018
16/10/2018
Consultation closes
21/12/2018
Policy Statement
Spring 2019

We are consulting on increasing the Financial Ombudsman Service’s (‘the ombudsman service’) award limit, which sets the amount of compensation the ombudsman service can require financial services firms to pay when it upholds a complaint against them.

Read CP18/31 (PDF)

We are proposing that, on 1 April 2019, the ombudsman service’s £150,000 award limit should change to:

  • £350,000 for complaints about acts or omissions by firms on or after 1 April 2019
  • £160,000 for complaints about acts or omissions by firms before 1 April 2019, and which are referred to the ombudsman service after that date

We also propose that, from 1 April 2020 onwards, both award limits should be automatically adjusted on 1 April to ensure they keep pace with inflation, as measured by the Consumer Prices Index (CPI). For any complaints referred to the ombudsman service before 1 April 2019 the limit will remain at £150,000.

Our proposed changes to the ombudsman service’s award limit will ensure more complainants receive fair compensation when the ombudsman service upholds their complaint against a firm.

Analysis presented in our Consultation Paper indicates that there could be around 2,000 complaints upheld by the ombudsman service each year where the amount of compensation the service determines is due is above the current award limit. If firms do not voluntarily pay compensation above the award limit then complainants could be suffering an aggregate financial harm of around £113m per year.

While the number of these ‘high value’ complaints is relatively low (just over 1% of all complaints upheld by the ombudsman service), there is a risk of very significant financial harm to complainants if they do not receive the full amount of fair compensation the ombudsman service considers is due. We consider it unlikely that the individuals and businesses who are eligible to complain to the ombudsman service would have the means to pursue firms for unpaid compensation through the courts. 

Who this applies to

This Consultation Paper should be read by:

  • all firms and other financial businesses covered by the ombudsman service’s Compulsory and Voluntary Jurisdictions
  • consumer groups
  • financial services and other industry representative bodies
  • professional indemnity insurance insurers and brokers
  • legal services providers

This Consultation Paper will also be of interest to:

  • groups who are currently eligible to complain to the ombudsman service (including consumers and micro‑enterprises)
  • the small and medium‑sized enterprises, charities, trusts and personal guarantors who will become eligible for the ombudsman service following finalisation of the near‑final rules in Policy Statement PS18/21, which we have published at the same time as this consultation paper

What you need to do

Please send us your comments by 21 December 2018.

Online response form

You can also:

  • email your responses to [email protected]
  • write to us at: James Tallack, Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN