Reviewed by Apex Insurance Brokers · Last reviewed 2026-06-22
For complaints referred on or after 1 April 2026, the Financial Ombudsman Service (FOS) can award up to £455,000 where the act or omission happened on or after 1 April 2019, and up to £205,000 for earlier acts. The limit is set by the FCA in DISP 3.7 of the Handbook and is updated annually in line with CPI from 1 April each year. The limit applies to compensatory awards; interest and costs are payable in addition.
The FOS limit is the maximum a firm can be required to pay where it accepts the FOS final decision, or where the consumer accepts it. The award is binding on the firm but the consumer can refuse to accept it, in which case the consumer retains their right to bring civil proceedings. The £455,000 cap therefore reflects the FOS regime, not the underlying civil liability. A claim worth £900,000 in damages may produce a £455,000 FOS award and a separate civil exposure for the balance.
The FCA sets the figures in DISP 3.7.4R, which uprates them in line with CPI each 1 April.
The FOS limit affects PI in three ways. First, the headline severity of complaint-driven claims is now substantially higher. A single pension transfer complaint that would once have produced a £150,000 maximum award can now produce three times that. Second, the IPRU-INV 13.1 requirement that PI policies cover FOS awards means insurers are paying out at the new, higher level. Third, the aggregation question matters even more — a cluster of FOS-eligible complaints can exhaust the annual aggregate quickly.
Our IFAs PI insurance guide sets out the IPRU-INV interaction in detail. Our insurance brokers PI insurance guide covers the MIPRU 3 position for insurance distributors, who are also exposed to FOS jurisdiction. Solicitors who hold themselves out as advisers — for example, in the conduct of probate or financial-planning-adjacent estate work — should also read our solicitors PI insurance guide for the SRA MTC position on regulatory awards.
FOS jurisdiction extends to eligible complainants under DISP 2.7. The categories include consumers, micro-enterprises, small businesses (with annual turnover under £6.5 million and either fewer than 50 employees or balance sheet under £5 million), charities with income under £6.5 million, and trustees of trusts with net asset value under £5 million. Many advised businesses now fall within the SME band, which means commercial advice can give rise to FOS exposure, not just retail advice.
The award limit is set out in DISP 3.7.4R; eligible complainants in DISP 2.7; the firm's complaint handling rules in DISP 1.4 to 1.6. Time bar rules under DISP 2.8.2R require complaints to be made within six years of the event or three years of awareness, whichever is later — though some complaints fall outside even those windows where there is good reason.
For PI reserving purposes, firms should consider whether their case-by-case reserve assumptions reflect the current £455,000 limit and not the £150,000 historic limit. Insurers reserving on book-wide assumptions have updated as the limit has risen; firms reserving internally for SUP 16 financial returns or for Consumer Duty MI should do likewise.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email info@apexinsurancebrokers.co.uk, or request a quotation.
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