Laura WilesA new interest rate – Bank of England base rate +1% – will apply to any compensation awards firms are directed to make in cases referred to the FOS on or after 1 January 2026.
The change follows a consultation last year which suggested, among other changes to the redress system, that amending the previous interest rate of 8% would better reflect actual economic conditions and costs to consumers.
The FOS will retain the power to impose the 8% simple interest rate in cases where businesses do not pay compensation awards on time.