The Financial Ombudsman Service is to increase its maximum compensation award for 2020/21 to £355,000 per case, a £5,000 increase on 2019.

FOS says in its annual Plans and Budget 2020/21 published today that the rise is in line with inflation and will go ahead.

The maximum compensation award was increased from £150,000 to £350,000 in April 2019, a move which sparked criticism from some adviser bodies.

The FOS said it would also go ahead with an increase in its case fee from £550 to £650.

Earlier this month the Financial Ombudsman Service said it would use £24.5m of reserves to freeze levies for the 2020/21 financial year.

The Ombudsman said the move was part of its effort to support UK consumers and businesses during the Coronavirus crisis.

The organisation revealed today it has received its first Covid-19-related complaints but said it was too early to forecast how many it will receive in the coming year.

Overall the FOS expects the number of new complaints over the coming year to drop by about 50,000 mainly due to a decline in PPI complaints.

However, it expects new complaints about investments and pensions to rise from 11,200 in 2019/20 to 12,500 in 2020/21 - a 12% increase.

In the report FOS chief executive Caroline Wayman said: “It goes without saying that Covid‑19 will further amplify both the uncertainty and potential complexity of our casework.

“It will also require a shift in our focus – as it has too for the regulator and the businesses we cover. We’ll need to be ready to handle any complaints that arise from the situations that individual and small businesses customers now find themselves in – a number of which have already reached us.”

To keep the burden of FOS costs down in 2020/21:

•The ombudsman service will maintain the number of “free” cases at 25 for firms outside the group account fee arrangement.

•The number of “free” cases will be 50 for each group in the group account fee arrangement

•The FOS has asked the FCA to freeze all minimum levies at 2019/20 levels