The Financial Ombudsman Service (FOS) will widen its small business insurance responsibilities after its board supported most changes proposed in a terms of reference review.

The service will resume oversight of small business broking disputes, restoring a role previously held before 2010.

Disputes involving loss-of-profits and business interruption insurance will become part of FOS’ responsibilities, subject to further discussions with key stakeholders.

“FOS is conscious that certain classes of these disputes can involve complex loss calculations,” the board says in an update released last week.

“To ensure FOS has the appropriate processes, expertise and resources to deal with this expansion in our jurisdiction, we intend to have discussions with industry, relevant stakeholders and experts before expanding this area of jurisdiction.”

FOS will also expand its jurisdiction over uninsured third-party motor vehicle disputes.

A consultation paper proposes increasing the maximum award FOS can make to $5000 from $3000 and allowing it to consider disputes even if the insured driver who caused the damage has failed to pay the excess to their insurer.

The industry opposed the higher monetary cap, arguing it could encourage more people not to insure.

FOS says it will “review the expanded jurisdiction after 12 months, to assess whether there has been any negative impact as a result of this amendment”.

There will be no introduction at this stage of a separate “per month” jurisdictional limit for income stream insurance claim disputes.

And the service does not intend to proceed with a proposed amendment related to “exceptional circumstances discretionary jurisdiction”.

FOS is consulting with the Australian Securities and Investments Commission over the proposed changes and intends to release an updated terms of reference by December.