The FCA is considering expanding the remit of Fos to allow more smaller businesses to lodge complaints against advisers.
The regulator has published a 54-page discussion paper on its approach to smaller businesses and has floated the idea of reforming Fos.
This would include expanding the eligibility criteria of the service which would allow larger small companies to take their cases to the ombudsman if they had a complaint against a financial adviser.
If this happened it would be accompanied by a review of the current binding award limit of £150,000 because of the larger sums newly eligible businesses might borrow, deposit, insure and invest.
Christopher Woolard, director of strategy and competition at the FCA, said: “Small businesses are a vital part of the UK economy.
“We need to consider whether we’re doing our part in delivering an effective, proportionate regulatory framework that gives them the confidence required to use the financial services they need to grow.”
At the moment some SMEs are unable to take complaints to the ombudsman.
This is because the service is limited to those businesses with fewer than 10 employees and either turnover or assets no greater than €2m (£1.4m).
The paper said the FCA would also look at whether there were specific products, services or distribution channels, including financial advice, particularly associated with poor outcomes for SMEs.
It said: “Our thematic review into conflicts of interest among general insurance intermediaries working with SME customers found that not all intermediaries understand or take steps to mitigate the conflicts of interest arising from their business models.
“It also found an expectation gap between SMEs, which often expect to receive advice from intermediaries, and the services the firms themselves are prepared to offer.”
The paper added that for most SMEs, purchasing financial services and pursuing claims or complaints were not core business operations so they were are reliant on advice when they could afford to pay for it.
Views or evidence on these issues should be sent to the FCA by 18 March 2016.
Adviser view
Darren Cooke, a financial adviser with Derbyshire-based Red Circle Financial Planning, said: “I don’t see why, if you are a small business and you receive bad advice, you should be dealt with any differently to an individual.”
