Following a review of the protections available, the Financial Conduct Authority (FCA) has launched a consultation on plans to give more small and medium sized enterprises (SMEs) access to the Financial Ombudsman Service (the Ombudsman).
At present, only individual consumers and around 5.5 million micro-enterprises (the smallest type of business) can access the Ombudsman if they have a dispute with a financial services firm. Businesses that cannot access the Ombudsman would need to take the firm to court. However, the FCA believes that many smaller businesses within this group struggle to do so in practice.
Under the proposed changes by the FCA, approximately 160,000 additional SMEs, charities and trusts would be able to refer complaints to the FOS. This would be done by changing the eligibility criteria to access the Ombudsman, so businesses with fewer than 50 employees, annual turnover below £6.5 million and an annual balance sheet (i.e. gross assets) below £5 million would become eligible.
As long as a complainant is eligible, the Ombudsman can consider complaints about any regulated activity; it can also consider complaints about some unregulated activities, such as, lending to companies or the activities of business turnaround units.
The FCA also proposes to extend eligibility to personal guarantors of corporate loans, provided the borrowing business also meets the eligibility criteria.
This consultation paper will be of interest to all:
• providers of regulated and unregulated financial services, including advisers to SMEs, credit providers and intermediaries dealing with SMEs
• consumers who are self-employed, own or manage SMEs, provide guarantees for SME loans, or contribute to a family business
• those who provide business support to SMEs and to organisations that represent businesses and self-employed individuals
The FCA is asking for responses to the consultation by 22 April 2018 and intends to publish a Policy Statement making final rules in summer 2018.
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