FCA Publishes Paper on SME Access to the FOS


The Financial Conduct Authority (“FCA“) is considering allowing Small and Medium Sized Enterprises (“SMEs“) access to Financial Ombudsman Service (“FOS“). On January 22, 2018, the FCA published a consultation paper, available here, exploring this option.

After speaking with SMEs, the FCA found that SMEs struggle to resolve disputes with financial firms through the courts and have no other means to seek redress.

The paper considers what size of SME should be allowed to use FOS, an “eligible complainant.” This term will be defined as a business that: is too large to be a micro-enterprise, has an annual turnover below £6.5 million, has a balance sheet not exceeding £5 million and has less than 50 employees. The FCA is also considering allowing charities and trusts of a similar size to be eligible complainants.

The FCA is also proposing that guarantors be eligible complainants. This will allow entities who provide security or guarantees to SMEs to be able to lodge a complaint with FOS.

FSA Investigating Mis-selling of Swaps to SMEs

On 23 May 2012, the Treasury Select Committee published a press release on correspondence between its chairman, Andrew Tyrie, and Lord Turner, chair of the FSA, and Sir Nicholas Montagu, Financial Ombudsman Service (FOS) chairman, on the potential mis-selling of interest rate swap products to small businesses by major banks. In his letter, Lord Turner stated that the FSA is “doing more work to understand…the types of products that have been sold” and that if the FSA finds “widespread evidence” of breaches of its rules or mis-selling it “will take action”. Press Release and Correspondence.