SimplyBiz chairman Ken Davy has questioned whether staff at the Financial Ombudsman Service would be able to take on larger complaints if the compensation limit at the adjudicator is increased.
Responding to a consultation on proposals to increase FOS’ compensation limit from £150,000 to £350,000, Davy says he fears that this could reduce access to advice as professional indemnity insurance costs for the sector rise.
However, he also adds that claims above £150,000 should not be dealt with by an independent adjudicator at all, but should be taken to court.
While ombudsmen at FOS judge individual cases based on what is fair and reasonable in the circumstances – which can be challenged either through a judicial review at the courts or through a verdict from the FOS’ independent assessor – Davy suggests claimaints should have to pay for a formal legal challenge rather than use the free FOS service in the event a complaint is above £150,000.
He says: “It is questionable if FOS personnel have sufficient knowledge and expertise to deal with larger claims and the additional complexities they require. Levels of redress over the current amount are not appropriate to be dealt with on what is a ‘fair and reasonable’ basis. It is wholly inappropriate for a FOS adjudicator or ombudsman to rule on such redress amounts, especially where the outcome of their decisions are subjective.
“It is neither fair nor reasonable for either party to be held by such a decision. The amount should remain at its existing level and it must remain for the courts to act as the adjudicator for amounts above this level.”
The FCA is also proposing allowing small businesses and not just individuals to take complaints about companies to the FOS.
Davy writes: “The primary need for a higher compensation limit is to accommodate the larger claims for SMEs. While we have expressed no opposition to including smaller firms within the protection of the FOS, for larger claims (in excess of £150,000) such disputes are better served by the courts.”