The Financial Ombudsman Service (FOS) has been given the go ahead by the FCA to increase its maximum compensation award to £375,000 from 1 April.

The news means the maximum award will rise by £20,000 from £355,000 to £375,000.

The award limit is the most the FOS can require a financial services firm to pay when Ombudsman complaints are upheld against them.

Many financial advisers were angered in 2019 when the FOS more than doubled the award limit from £150,000 to £350,000.

The FOS says the limit is now adjusted each year in line with inflation, as measured by the Consumer Prices Index (CPI).

From 1 April, the award limits will change to:

• £375,000 for complaints referred to the FOS on or after 1 April 2022 about acts or omissions by firms on or after 1 April 2019
• £170,000 for complaints referred to on or after 1 April 2022 about acts or omissions by firms before 1 April 2019

For complaints referred to the FOS between 1 April 2019 and 31 March 2022 about acts or omissions by firms on or after 1 April 2019, the limit will be £350,000 and for complaints referred before 1 April 2019, the limits will remain at £150,000.

The FOS website will be updated to reflect the changes from 1 April.

The FCA’s policy statement PS19/8  sets out the background to increasing the award limits. The change can also be seen in the FCA’s handbook.