FCA launches consultation: widening the door for SMEs’ access to the Financial Ombudsman Service

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The FCA has launched a call for input from individuals and businesses as to whether the threshold for small and medium sized enterprises (SMEs) to refer complaints to the Financial Ombudsman Services (FOS) should be increased. The deadline for undertaking the survey is 28 April 2023.


The FOS is an independent tribunal for complaints against financial businesses regulated by the FCA. It an attractive option for complainants as it is a free and informal process which can be initiated online. As an alternative to pursuing a claim in the civil court, the FOS determines cases on what is “fair and reasonable” and so while it has regard to the law, it is not strictly bound to follow it. The FOS currently deals with disputes through an initial informal assessment and ultimately has power to issue binding decisions and order compensation of up to £375,000 (for complaints referred on or after 1 April 2022 about acts or omissions on or after 1 April 2019).

In 2019 the FCA extended the FOS’ remit and opened to complaints initiated by some SMEs. Currently the FOS considers complaints by SMEs with:

  1. an annual turnover up to £6.5 million; and
  2. a balance sheet of less than £5 million or employees of fewer than 50 people.

The FCA is now launching a consultation as to whether these current thresholds are appropriate in current circumstances for providing access to dispute resolution to enterprises with insufficient resources for more formal claims. It is worth noting that the cap for compensation is set to increase to £415,000 from 1 April 2023, most likely to keep up with rising inflation.


The consultation will be of interest to current stakeholders in and users of the FOS, and to larger SMEs who may benefit from its widening participation. Since 2019 the FOS has received complaints from 4,782 eligible SMEs out of approximately 920,589 total complaints, so an increase in complainants engaging with the process would, on those reported figures, likely increase by a modest amount. Nonetheless, this may have knock on effects for other stakeholders:

  1. Regulated financial services such as independent financial advisors, insurance companies and brokers who may face greater exposure to claims within the FOS. This may cause an increase in PI insurance premiums and require a change in approach to how firms deal with certain complaints;
  2. Cases of greater complexity may be referred to the FOS, and there have been concerns raised over the expertise and competency of the FOS to deal with these complaints. On the other hand, it is possible that it will encourage resolution through the FOS for cases which would otherwise have been litigated at considerable cost in court.

Ultimately, the consultation is to gather feedback on the possible implications of widening the jurisdiction of the FOS. If you or your business may be impacted by this change, then do take part in the survey linked above.

This article was co-written by Jemimah Lack, Trainee Solicitor in CMS’ Insurance and Reinsurance team.