PIFMA is concerned that the proposed extension of the upper limits of compensation FOS can order firms to pay out, from £150, 000 to £350,000 could put some small firms out of the market as they will be unable to get affordable PII cover.
From 1 April, 2019, FCA is proposing to increase the limits to £160,000 in relation to complaints about acts or omissions by firms that took place before 1 April 2019, and to £350,000 for those that took place after that date. It also proposes that both awards will adjust automatically on 1 April to take account of inflation (except that the current £150,000 will remain static in relation to complaints referred before 1 April 2019). FCA has made the proposals because it believes around 2,000 complaints that the FOS upholds each year deserve compensation above current limits and that complainants could lose £113m per year if firms do not voluntarily pay the excess. FCA has requested comments by 21 December.
Separately, FCA confirmed it is to extend FOS access to SMEs with an annual turnover below £6.5m and fewer than 50 employees – it says this will be around 210,000 entities. FCA has published near final rules, and plans that the final rules will come into force also on 1 April 2019.