FSA to increase FOS limit to £150k
Share
The FSA has proposed increasing the limit on awards made by the Financial Ombudsman Service from £100,000 to £150,000.
Earlier this year, concern was expressed in Money Marketing that professional indemnity insurance premiums could rise if the FOS limit was increased. Some experts suggested that the limit could be raised to £200,000.
The move comes as the FSA publishes a consultation paper on complaints handling today alongside firm specific compaint figures.
A statement from the FSA says: “The FSA also proposes to increase the limit on awards made by the Financial Ombudsman Service from £100, 000 to £150,000 to provide fairer and more effective redress for customers.”
If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing
View results 10 per page | 20 per page
Readers' comments (15)
Michael Fallas | 30 Sep 2010 9:16 am
One wonders who will be left to pay all them all?
If the FSA did it's job properly we would not need to increase award limits but decrease them and why do the FSA staff not pay towards any compensation scheme (from their salaries we pay them), as given the banking crisis etc. they have got away scot free for their mistakes. They should also have PI cover like the rest of us as well.
They cannot expect us to take responsibility for our mistakes when they take none for their own.
Unsuitable or offensive? Report this comment
Martin Archer | 30 Sep 2010 10:03 am
With an increase in the award limit comes a greater responsibility to deliver less “rough and ready” justice. It really ought not to be acceptable in a civilised society to deprive a person of £150k, without even having the decency to hear what they have to say about the advice they gave in person. Once we are talking about awards over £100,000 the cost/benefit balance alters. If this is to proceed FOS must implement a mandatory right to have an oral hearing. Once the apparatus for oral hearings are in place then there seems no good reason why they cannot be offered as of right in respect of any claim over £50,000.
Unsuitable or offensive? Report this comment
John | 30 Sep 2010 10:05 am
I agree with Michael - it is surely a sign of failure if the FSA has to raise the compensation limit. As if to illustrate the point I heard another so-called expert on TV this morning arguing in favour of banning self-certified mortgages. If we have a growing number of people working on a part-time and self-employed basis, why is that a good idea?
Unsuitable or offensive? Report this comment
Evan Owen | 30 Sep 2010 10:18 am
This compensation machine will become your prison, and theirs.
What is AIFA doing about all this unfairness? It is bad enough for those currently authorised but my sole trader friends who have left the industry, some a decade or more ago, can't sleep, partly because of the never ending worry and partly because they have lost their homes, their families, their dignity.
I don't argue that one or two may have been irresponsible but the fact remains that a never ending liability which is judged using 100% hindsight by a computer decision tree is immoral and I would argue illegal, well I would wouldn't I..
Unsuitable or offensive? Report this comment
Bob Donaldson | 30 Sep 2010 10:23 am
We need some degree of representation if these sort of sums of money are to be handed over by FOS. It is bad enough not being represented when they have the power to hand over £50K but £150K this is ridiculous.
We need proper representation in this industry and it either comes from AIFA or another trade body!
Unsuitable or offensive? Report this comment
Steven Farrall (Adviser Alliance) | 30 Sep 2010 10:39 am
To Michale and John et al. The 'failure' of the FSA is in its genes. It cannot do anything else but fail. If you take the time to study the nature of freedom and markets, the wisdom of crowds, the socialism calculation problem, the institutional incompetence of alll bureaucracies and overlay all that with the corruption of the UK political class and its felllow travellers in the quangos, especially including the FSA, you will work out that th FSA will always fail. Or rather it can only 'succeed' by instigating totalitarianism. Or communism if you prefer.
The FSA IS the problem, it is not ever the solution. The increase in PI premiums (a free and competitve market) reflects the additional risk created by the FSA institutional incompetence, not simply the increase in the FOS limits. These limits, by the way, simply create excesse moral hazard, that is again of themselves creating risk.
The whole system is bizarre and it will fail, always.
Unsuitable or offensive? Report this comment
Anonymous | 30 Sep 2010 10:41 am
The FSA, FOS, and FSCS think that the nails in the IFA's coffin need to be bigger !
Unsuitable or offensive? Report this comment
michael brayne | 30 Sep 2010 10:47 am
There are no self cert mortgages available on the market anyway, they have all been pulled and that's why house prices are falling because the funds are no longer available. The FSA put prices up now they are putting them down. Banning self cert mortgages is like banning Do do hunting.
Unsuitable or offensive? Report this comment
Norm d'Plume | 30 Sep 2010 11:05 am
A 50% increase is a bit more than inflation!
Why £100k, why £150k? What empirical evidence is there to support the suitability of any sum? Why is the FSA doing its usual stunt of picking figures out of the air?
In fact why is there a limit at all? It's a general principle of the law of negligence that the negligent party pays full redress. If one's insurance doesn't go up to that limit, then one's assets are at risk. Insurers are only in it up to their limit of indemnity, so premiums should not increase.
Having said that, FOS has to be accountable at law for the decisions they make, with appropriate damages against them if they get it wrong. A situation where they can please themselves is neither fair nor tenable.
Unsuitable or offensive? Report this comment
Nick | 30 Sep 2010 11:05 am
Bob - representation won't come from AIFA!
Unsuitable or offensive? Report this comment