FCA gives SMEs greater access to the Financial Ombudsman Service

The changes will mean that SMEs with an annual turnover below £6.5m and fewer than 50 employees, or an annual balance sheet below £5m will now be able to refer unresolved complaints to the Ombudsman Service.

Respondents to an FCA consultation in January 2018 strongly supported the extension to larger SMEs, charities and trusts, and a new category of personal guarantors.

The Ombudsman will now begin taking steps towards putting the extension of its remit in place, including starting recruitment of additional staff.

The FCA has also published a consultation on raising the maximum amount of compensation the Ombudsman Service can require financial services firms to pay out from £150,000 to £350,000.

The FCA will publish its final rules later this year which are then expected to come into force on 1 April 2019.

Andrew Bailey, chief executive of the FCA, said: “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. 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.”