After some debate, the FCA has decided and published the rules which will probably apply for small and medium sized enterprises (SMEs) to access the FOS. This is a game changer for FOS, a huge number of businesses will be able to use the service, with the probability of much more complex complaints about more complex financial issues. Not only this but the compensation limit will rise to £350,000 index linked.
There has been discussion in the past about whether the level of training and financial qualifications required for FOS adjudicators and ombudsmen is sufficient for their current caseload, let alone the demands of the new SME workload and added complexity. The Parliamentary Treasury Committee has expressed concern that FOS is not ready for this change (and I would say this is an understatement), in fact the Committee seems to prefer a proposed new independent tribunal to handle SME cases
The increased compensation limit means that some cases now handled by the courts on a legal basis will now be handled by FOS on a “fair and reasonable” basis with £350,000 compensation possible and an investigator with perhaps little knowledge of the financial areas or products involved and no independent appeals. I predict an increased demand for judicial reviews as the cost of this is smaller compared with the chance to get £350k.
FOS needs a considerable shake up to handle this new challenge. I suspect some SMEs may prefer the courts.