The Financial Conduct Authority (FCA) has published a consultation paper proposing to increase the maximum award the Ombudsman can require firms to pay from £150,000 to £350,000. The new limit will apply to acts or omissions from 1 April 2019 and will automatically adjust in line with inflation in every subsequent year. For acts or omissions prior to 1 April 2019, the limit will increase to £160,000.
This is the first increase since 2012, when the limit was raised from £100,000 to £150,000.
The new limit would represent a significant increase for firms, with the FCA estimating they will pay an extra £113m to complainants if the change is implemented. The FCA believes that the change is necessary to fairly compensate the estimated 2,000 complainants who are recommended for awards over £150,000 each year but do not have the necessary resources to seek the full value of their claims through the courts.
The FCA’s consultation paper performs a cost/benefit analysis of the proposed increase and seeks submissions on specific consequences, such as the potential increase in PII premiums for firms. Submissions can be made via the FCA’s website up to 21 December 2018.