The amount of compensation which can be awarded by the Financial Ombudsman Service could be increased from £100,000 to £150,000 under new proposals from the Financial Services Authority.
The change will be of particular concern for small firms such as IFAs where an award at the upper end of the limit can impact on their ability to stay in business.
“It is really important that firms in such a position feel that they have received a fair and just hearing,” said Dan Preddy, financial services dispute resolution partner at Beachcroft LLP.
However, the change could also make it harder for such firms to obtain affordable professional indemnity cover in the future and may lead to further exits from that sector, he warned.
The original limit of £100,000 was set...