The regulator has increased the Financial Ombudsman Service’s award limit from £100,000 to £150,000 and confirmed new complaint-handling rules for firms.
In a paper on consumer complaints, published last week, the FSA says the maximum compensation limit will rise to £150,000 in January 2012.
The regulator first floated the idea of an increase to the limit in March 2010.
The paper also sets out new complaint-handling rules, including abolition of the “two-stage” complaint-handling process. The change means firms must respond to consumer complaints with a final decision in the first instance and can no longer issue a provisional finding.
It says this will ensure firms resolve complaints fairly and do not dismiss them on first contact with the complainant. The change will be introduced in July 2012. Companies will be required to take account of prior ombudsman decisions and previous customer complaints when assessing cases and will have to nominate a senior individual responsible for complaint-handling.
FSA director of conduct policy Sheila Nicoll says the FSA has identified major failures with the way firms handle complaints. She says: “We would prefer customers were not put in a position where they had to complain but when they do, we want them to be treated fairly by their firm, with their complaint resolved promptly and being provided with redress when needed.”
PYV chief executive Neil Pointon says the rise in the FOS limit could lead to higher professional indemnity insurance premiums. He says: “Someone has to pay for this and it could result in increased PI premiums in the future.”