Scope for charities to complain to Financial Ombudsman Service could be widened

The Financial Conduct Authority is consulting on plans to widen access to the service

Small charities with complaints about financial services might soon be able to appeal to the Financial Ombudsman Service for help with banking or financial disputes under plans unveiled by the industry watchdog.

Currently, only individuals or micro-enterprises – defined as organisations with annual turnovers of less than €2m (£1.76m) and fewer than 10 employees – can complain to the ombudsman if they have a problem with their banking, insurance or financial advice providers. Larger organisations must take any company they have a dispute with to court.

But the Financial Conduct Authority has opened a consultation on plans to widen access to the ombudsman.

Under the proposed rules, organisations with  annual turnovers of up to £6.5m and fewer than 50 employees would be eligible, including charities and trusts with assets of up to £5m.

In the consultation document, the FCA says: "SMEs often have more in common with individual consumers than larger businesses. Many SMEs that buy or use financial products behave similarly to individual consumers and can experience harm in similar situations."

It says this can be due to a lack of financial and legal expertise within the organisation or what the organisation expects from financial services providers and what the providers believe is expected of them.

Andrew Bailey, chief executive of the FCA, said in a statement: "It is important for everyone, including financial services firms, that there is an effective dispute-resolution mechanism for businesses.

"Our evidence suggests some small businesses currently find it hard to achieve a fair outcome in disputes with financial services firms because court action is not a realistic option for them."

The consultation will run until 22 April and the final decision will be published in the summer, the FCA said.

Finance News

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in
RSS Feed

Third Sector Insight

Sponsored webcasts, surveys and expert reports from Third Sector partners