The FCA has published a consultation on widening access to the Financial Ombudsman Service (FOS) to small businesses.
This will be a welcome development for SMEs who fall within the proposed eligibility criteria, but will increase the cost to financial services firms of serving their SME customers.
If implemented, the proposed changes will mean that smaller businesses, who previously may not have had the bargaining power or resources to commence legal proceedings against a financial services firm, will be able to refer their dispute to the FOS. With an additional 160,000 firms, charities and trusts that could potentially fall within the jurisdiction of the FOS, there is likely to be a significant increase in the amount of FOS complaints and consequently the amount of redress that financial services firms are required to pay. The increased workload of the FOS will also lead to an increase in the regulatory fees and levies charged to firms.
The FCA has asked for comments on its proposals by 22 April 2018. The FCA intends to finalise any changes by this summer.
A link to the consultation paper is here: https://www.fca.org.uk/publication/consultation/cp18-03.pdf
The UK financial watchdog has proposed to give small businesses the ability to complain to the Financial Ombudsman about their bankers following high profile lending scandals.