A big change to compensation rules is being plotted by the financial ombudsman after a spike in complaints. The Financial Ombudsman Service (FOS) is proposing to change the interest rate applied to the compensation awarded to consumers and tie it to the Bank of England (BoE) base rate.

If a consumer is found to have lost out because of their financial firm’s errors, the Financial Ombudsman can order the business to pay compensation, plus interest. There are different types of interest businesses can be directed to pay, and one of these compensates consumers for being “deprived” of money.

The Ombudsman can currently direct the business to pay 8% interest on top of the compensation for the period their customer was out of pocket. It can also tell a business to pay 8% interest if it doesn

See Full Page