FOS has published its Approach to assessing compensation for non-financial loss claims.

The Approach sets out FOS’s principles of compensation for non-financial loss as well as 8 case studies.

FOS can require a financial services provider (FSP) to compensate an Applicant (who is a natural person) for non-financial loss caused by the FSP’s conduct. FOS says it takes a conservative approach to assessing compensation for non-financial loss.

The maximum amount FOS can award for non-financial loss is $3,000 per claim. But FOS says there can be several claims for compensation for non-financial loss in a dispute.

FOS may also decide a non-financial remedy, such as a letter of apology, is appropriate.

FOS will only award compensation for non-financial loss where there has been an unusual amount of physical inconvenience, time taken to resolve a situation, or interference with the Applicant’s expectation of enjoyment or peace of mind. In a privacy dispute, FOS may award compensation if the Applicant has suffered humiliation or injured feelings.

In assessing whether to award compensation for non-financial loss, FOS expects Applicants to be “moderately robust”, bear the normal degree of inconvenience experienced when a problem occurs, and take reasonable steps to minimise the inconvenience suffered. Where an Applicant has contributed to their loss arising from the FSP’s conduct, their level of compensation may be reduced accordingly.

FOS can compensate an Applicant for non-financial loss arising from the FSP’s poor management of the claim. When doing so, FOS considers the severity and impact of the FSP’s conduct on the particular Applicant. For example, an Applicant in financial difficulty would be more impacted by unreasonable delays by an FSP.

Where FOS awards compensation for non-financial loss and there is a related debt owing to the FSP, FOS says it will usually be appropriate to apply the compensation to the debt.