Payments awarded by the Financial Ombudsman Service (FOS) may not exceed 100,000 by any method, it has been ruled.

The High Court made the ruling following two claims that damages awarded to complainants had exceeded the limit.

It was found that this was achieved by listing the awarded damages as directional, rather than as monetary redress.

However, the court judged that any payment of money constitutes a monetary award and thus must conform to the 100,000 limit.

The ruling may benefit small firms which are identified by the FOS as more likely to be reliant on their Professional Indemnity (PI) insurer.

"Small firms often need to involve and rely on their PI insurer," principal ombudsman Tony Boorman stated.

"This can mean many smaller firms feel they're not actually dealing with the complaint themselves."

Under the latest development, such companies are protected against awards in excess of the limit even if the redress payment is stated in terms of formulae, rather than as a direct figure.