Trade body AMI has spoken out against the FCA’s proposed increasing the compensation limit of the Financial Ombudsman Scheme (FOS) from £150,000 to £350,000, announced last week.
AMI argued that by more than doubling the compensation limit the FCA has lost sight of both its own and FOS’s purpose.
The Ombudsman was set up with a £100,000 limit, which was raised to £150,000 in 2012 in line with inflation.
The trade body said it’s purpose was to cater for cases that could be dealt with speedily and by using dispute resolution techniques to gain agreement and cases above these levels were deemed to be more appropriate for legal decisioning in courts based on contract law.
Robert Sinclair, chief executive of AMI, said: “Accessing dispute resolution for such significant cases on a fair and reasonable basis rather than a proper legal dispute procedure through the courts is just inappropriate.
“Just because there are examples of higher claims being paid out does not warrant a radical increase to the FOS limit.
“Even most of the respondents who agreed to the extension of FOS eligibility to include larger SMEs2 did not support an increase to the limit, with only three suggesting that it should be that high.
“Relying purely on data analysis is not a sufficient justification. It was always considered that higher value disputes with complex arguments should be the subject of legal remedy rather than FOS.
“AMI will respond to the consultation accordingly and we encourage individual firms to do the same.”