The Financial Conduct Authority (FCA) has launched a consultation over proposals for increasing the remit of the Financial Ombudsman Service (FOS) to give greater access for small businesses that are in dispute with a financial services firm.
At the moment, only the smallest businesses can make a complaint to the FOS. The FCA is proposing to change the definition of ‘eligible complainant’ to include those with a turnover of under £6.5 million and fewer than 50 employees. It says that these changes would mean that approximately 160,000 additional SMEs, charities and trusts would be able to refer complaints to the Ombudsman.
As long as a complainant is eligible, the Ombudsman can consider complaints about any regulated activity; it can also consider complaints about some unregulated activities, such as, lending to companies or the activities of business turnaround units.
The FCA also proposes to extend eligibility to personal guarantors of corporate loans, provided the borrowing business also meets the eligibility criteria.
“It is important for everyone, including financial services firms, that there is an effective dispute resolution mechanism for businesses,” explained Andrew Bailey, Chief Executive at the FCA. “Our evidence suggests some small businesses currently find it hard to achieve a fair outcome in disputes with financial services firms because court action is not a realistic option for them. We have considered what could be done within our powers and the remit of the Financial Ombudsman Service to improve this situation and are proposing to expand access to the Ombudsman.”
The consultation will run until 22nd April this year. The FCA will then publish a Policy Statement making final rules in summer 2018.
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