If you were mis-sold a financial product, you might be entitled to compensation. Find out what your rights are and how to claim.
Claiming compensation if you’ve been mis-sold
Ways you might have been mis-sold
You might be entitled to compensation if your bank or other financial company sold you a product that wasn’t suitable.
Follow these steps to work out what you need to do
What is financial mis-selling?
You might have been mis-sold a financial product such as a mortgage, pension, insurance or an investment if the risks or features weren’t explained to you properly, or it wasn’t right for your personal circumstances.
It’s not about whether you lost money. For example, you can still complain if you were sold a riskier investment than you were comfortable with. But if you were told about the risk, you can’t complain if an investment performed badly.
Mis-sold mortgage and endowment examples
Cases could include:
being sold a mortgage that ends after you retire, and the adviser didn’t check if you’d be able to afford repayments
not being told about commission the adviser would get from the lender
being advised to self-certify (borrow money without proving your income) or to overstate your income to borrow more
being advised to switch mortgages without explanation, and this resulted in you losing money (such as fees and penalties)
being advised to take a fixed-rate mortgage if you asked for a product with no early-exit penalties.
Mis-sold investment examples
This could include:
not being told about the risk involved, for example, you asked for a low-risk product and were recommended a high-risk one
not being told how your money would be invested
the product not suiting your needs, for example high investment fees.
Mis-sold insurance examples
Cases could include:
being sold insurance you didn’t need, such as cover for redundancy when you were already unemployed, retired or self-employed
not being eligible to claim on a policy you were sold, such as being too old to claim on travel insurance.
Mis-sold pension examples
This could include:
not being told about how your money will be invested and the level of risk to your pension pot
key terms not being explained, such as not being able to access your money until age 55
being recommended to transfer to a specific pension without your options and possible consequences explained
the type of pension wasn’t suitable, such as a self-invested personal pension (SIPP) having higher than normal fees and charges.
How to complain if you’ve been mis-sold
If you want to complain, act quickly – you have more options if you complain within three years of noticing something was wrong or six years of being sold the product. It’s a good idea to gather any paperwork you have before you start.
Follow these steps to work out what you need to do
Complain to your provider or adviser
Find out who to contact by looking for:
the company’s complaints process on their website
any paperwork you received, or
by asking them.
When complaining, be clear, concise and stick to the facts.
The company has eight weeks to investigate and respond with a resolution. For example, they might offer to pay enough compensation to return you to the same financial position you were in before you took out the product.
You can usually choose to accept this or provide more information if you don’t think it’s fair. The company will then provide a final response.
If you’re unhappy with this, or eight weeks have passed, you can choose to take your complaint to the free Financial Ombudsman Service (FOS).
Ask the Financial Ombudsman Service (FOS) to investigate
You have six months from receiving the firm’s final response to complain to the FOSOpens in a new window It also needs to be within six years of being sold the product, or three years from when you noticed something was wrong.
Your case will be investigated to decide if the company has acted in a fair and reasonable way, or whether they need to do more to put things right. If compensation is due, the maximum that can be paid is £415,000 (£160,000 if the mistake happened before 1 April 2019).
If the FOS sides with the company, this is usually where a claim ends – you could choose to go to court, but this is expensive and you might not win
To start your complaint, use the FOS complaints checker toolOpens in a new window
Don’t pay someone to manage your complaint
Think carefully before using a company to make your complaint about financial mis-selling. They’ll usually take a large chunk of any compensation you receive and follow the same process you could easily do yourself.
If the firm has gone out of business
If you think you’ve been sold a product that wasn’t suitable but the firm responsible has gone bust, all is not lost. You might be able to get something back through the Financial Services Compensation Scheme (FSCS).
Follow these steps to work out what you need to do
Check you can claim
You can claim from the FSCS if you’ve lost money due to:
bad mortgage advice on your main home (buy-to-let mortgages, commercial and loans secured on your property are not covered)
an unsuitable insurance policy, including travel, home, motor, pet, life, income protection and health insurance
poor advice or management of investments such as funds, stocks and shares, personal pension plans and mortgage endowments
a mis-sold funeral plan.
Your adviser must have been authorised by the Financial Conduct Authority (FCA) or Prudential Regulation Authority (PRA) when they were trading.
Use the FSCS claims toolOpens in a new window to check if you can make a claim.
How to claim
To start a claim you’ll need:
contact the FSCSOpens in a new window for a paper application form.
You’ll be asked to upload or post copies of relevant documents, such as proof the firm gave you advice, so it’s best to have these ready. Check the required documents per productOpens in a new window to see what you’ll need.
Your claim will be investigated and a decision made on whether you qualify for compensation. See how long claims usually takeOpens in a new window
You should also register a claim with the administrator who has been appointed to be responsible for the company that you dealt with.
How much compensation you might get
The scheme can only pay out for financial loss. The maximum you can get depends on when the firm went out of business:
after 1 April 2019: up to £85,000
between 1 January 2010 and 31 March 2019: up to £50,000
before 1 January 2010: up to £48,000
For certain types of insurance, such as pet, travel, home and dental, the FSCS would pay out 90% of the value of your claim.