The Financial Conduct Authority (FCA) recently came under fire for a consultation paper which aims to amend the way it handles complaints from businesses and individuals.
The Complaints Scheme allows consumers to complain to financial regulators, including the Prudential Regulation Authority (PRA) and the Bank of England, and seek compensation for any potential regulatory failures.
Currently, there is no limit on the sum awarded to successful claims, but it appeared as though the consultation paper was seeking to cap the sum people could be awarded.
Section 4.13 of the document said: “Any compensatory payment relating to a financial loss will not exceed £10,000 ($13,044, €11,043), save in exceptional circumstances.
“Moreover, in most cases we would expect any compensatory payment we make to be lower than this.”
But an FCA spokesperson told International Adviser it is not trying to put a cap on compensation.
The £10,000 ‘limit’ was set because there have only been three instances in the last four years where consumers were awarded more than that sum, following a complaint.
The regulator said that the industry was confused on what the proposed changes aim to do, but the figure was only used to make the scale of its compensation clearer.
It added that the phrasing in the consultation paper was based on expectations, as it does not foresee future payments to exceed that sum.
But that doesn’t mean that people will not be able to receive more than £10,000 if eligible, and it emphasised that there isn’t, and there won’t be, a cap on compensation.