We recently advised you in a newsletter article, that can be accessed here, of a change to the FSCS limits for mortgages and investments. The good news is that those are the key changes for FSCS and little else is changing. 

FOS changes
However, there will be changes to Financial Ombudsman Service (FOS) limits from 1 April 2019. The headline change is the increase in  compensation cap from £150,000 to £350,000 for ‘acts or omissions’ by a firm. The cap will increase annually by CPI. 

For those complaints referred to the FOS as a result of a firm’s ‘acts or omissions’ that occurred before 1 April, but where the complaint was referred to the FOS after this date, the limit is increased to £160,000 – again inflation proofed. 

Eligibility criteria
There is also a change to the criteria for eligible FOS complainants i.e. those that have a right to refer their complaint to FOS. The eligibility criteria for FOS complaints can be found here. The key changes can be summarised as follows.

In addition to a ‘Consumer’ client, the following categories of client are also now eligible to complain to FOS for ‘acts or omissions’ occurring after 1 April: 

• A SME, defined as an enterprise which:

         – Has an annual turnover below £6.5m; plus either of
         – Employs fewer than 50 persons; and
         – Has an annual balance sheet that does not exceed £5m.

• A Charity which has an annual income of less than £6.5m;
• A trustee of a trust which has a net asset value of less than £5m.

This increases the number of potential complainants.

Changes to  RMAR Section J
It also means a potential change to the way firms complete RMAR section J ‘Data required for the calculation of fees’.

Firms that currently exclude income reported in RMAR section J, because the client is not eligible to refer to FOS, may now have to report higher income figures as a result of the change of eligibility definition of FOS complainants. 

If 1 April falls part way through a reporting period, the increased income will need to be added from that date i.e. income from newly eligible firms.

The FSCS eligibility criteria is unchanged.

Further changes to RMAR Section J
The good news for investment firms is that, while the classification numbers for some of the boxes are changing, the ‘Life Distribution and Investment Intermediation’ rows are being combined into one for the annual return. Bonds and pensions income is no longer separate to investments so, dare we say it, this could save time.