From 1st April, the award limit set by the Financial Ombudsman Service, which is responsible for resolving complaints between financial services businesses and their customers, will rise from £150,000 to £350,000.

To be awarded this maximum amount, complaints about actions by firms must be made on or after this date. For complaints that are lodged before 1 April and referred to the Financial Ombudsman after that date, the limit will rise to £160,000.

The FCA confirmed that both award limits will be automatically adjusted every year to keep pace with inflation. The City watchdog has also taken the decision to extend the service to small and medium-sized enterprises (SMEs), which will allow an additional 210,000 smaller companies to make complaints to the Financial Ombudsman.

Andrew Bailey, chief executive of the FCA, said: “Consumers and small businesses struggle with the cost and time needed to take firms to court, so it is essential they can receive fair compensation from the Financial Ombudsman Service when things go wrong.

“We have listened carefully to the feedback we have received and believe our approach is right and will bring benefits to both the consumers and micro-enterprises currently eligible for the ombudsman service and the small businesses who will become eligible in April.”