FOS urges claims limit increase
The Financial Ombudsman Service (FOS) has called for a significant increase in claims limits and compensation caps for consumers and small business, and has labelled the current limits as outdated.
In its submission to the Ramsay Review, FOS has also called for the merging of the terms claims limits and compensation caps in order to reduce complexity for financial services providers and consumers.
Chief ombudsman, Shan Tregillis, said FOS had carried out financial modelling to arrive at more realistic monetary and compensation limits for general consumer disputes.
"We have looked at increases in key variables relevant to both FOS's disputes and general economic indicators," Tregillis said.
"This results in a consumer compensation range of $625,000 to $955,000 across different variables. FOS supports an increase at the upper end to future proof the system."
FOS can only currently examine disputes involving claims of up to $500,000.
Tregillis said FOS also examined data on small businesses lending, which supported the case for a broader small business jurisdiction that would allow small businesses to approach FOS in relation to a credit facility of up to $5 million in value and have the ability to access compensation of at least $1 million.
"We believe this limit would capture at least 98 per cent of all small business lending disputes," he said.
FOS also welcomed the Federal Government's announcement to extend the Ramsay Review's terms of reference to include recommendations on the establishment of a compensation scheme of last resort.
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