Smaller SMEs will now be able to use the FOS for complaints
The FCA has extended its reach for the Financial Ombudsman Service (FOS) so smaller SMEs can utilise it.
SMEs with an annual turnover below £6.5m and fewer than 50 employees, or an annual balance sheet below £5m will now be able to refer unresolved complaints to the ombudsman service.
Under the ‘near-final’ rules published today, it is predicted that around 210,000 additional UK SMEs will be eligible to complain to the ombudsman service.
Back in January, the FCA extended its service to allow larger SMEs access, now it has targeted the other end of the spectrum and allowed smaller entities access to its complaints system.
The criteria for access to the service has been amended so that SMEs must only meet the turnover test and one of either the headcount or balance sheet total tests, not all three tests as previously proposed.
The FCA made this change in response to feedback that applying all three tests would unfairly exclude certain types of SME, for example those with relatively low turnover but 50 or more employees.
Andrew Bailey, chief executive of the FCA said:
“We recognise it is vitally important for SMEs to have a mechanism to resolve disputes and we are clear the Financial Ombudsman Service is the right route for this.
”The changes we are making are as far as we think we should go within our powers, but they will provide access to the ombudsman service for a significant number of smaller businesses. Before this, their only option was potentially a costly legal one through the courts.
“The changes are an important extension of the ombudsman service’s role and remit. We will work closely with them to ensure that they are ready, so that SMEs are able to benefit from the new rules as soon as they come into force.”
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