Financial mis-selling – what to do if you're affected

If your bank or another financial company sold you a product that wasn’t suitable for you, you may get compensation if you make a complaint. If you are unhappy with your firm’s response, the Financial Ombudsman Service or Pensions Ombudsman may accept and investigate your complaint for free.

• What counts as financial mis-selling?
• Examples of financial mis-selling
• If you’ve been mis-sold a financial product
• If the firm that advised you has gone out of business
• Don’t pay for someone to manage your complaint about financial mis-selling

What counts as financial mis-selling?

Mis-selling means that you were given unsuitable advice, the risks were not explained to you or you were not given the information you needed, and ended up with a product that isn’t right for you.

As a non-financial example, say you were looking to buy a computer. You told the shop assistant that you planned to watch DVDs on it, and they recommended a model. Then you took it home, and found that it didn’t have a DVD drive. There’s nothing wrong with the computer itself – it’s not faulty – but it’s not what you needed. The computer was mis-sold to you.

It’s just the same when you’re sold a financial product. The person who advises you to buy must recommend something suitable for your needs, and explain properly what it can and can’t do. They should make sure you know the risks. If they don’t do this, you may be able to claim compensation.

Treating customers fairly

Financial services must be sold to you in a manner that is “fair, clear and not misleading”.

Source: Financial Conduct Authority (FCA)

Key things to remember about financial mis-selling:

• It’s not about whether you lost money. Even if you didn’t lose out, if the product isn’t right for you – perhaps it’s a riskier investment than you wanted – you can still make a complaint about financial mis-selling.
• You can’t complain just because an investment performed badly. Some investments are risky, and if you take a gamble you have to accept that you might lose. But you can complain if you weren’t told about the risk.

Examples of financial mis-selling

Payment protection insurance (PPI) mis-selling examples

Some ways you might have been mis-sold PPI:

• You were unemployed or retired when you were sold the PPI.
• You were told that PPI was compulsory and that you had to take it out.
• You were pressured into buying the PPI.
• Nobody fully explained the terms and conditions (small print).
• You weren’t told the rules about pre-existing medical conditions.
• You weren’t told that you could buy PPI from another company.
• You weren’t told about exclusions to the policy.
• Nobody asked if you had any other insurance which could cover the loan.

Mis-sold mortgage examples (including endowments)

Some ways you might have been mis-sold a mortgage:

• You were advised to self-certify (borrow money without proving your income) or overstate your income in order to borrow more.
• Your mortgage end date is after your retirement date.
• You were advised to switch lenders and weren’t told about the fees and penalties.
• You were given a fixed-rate mortgage and told to remortgage to a better deal later on, then incurred penalties for leaving the fixed rate early.
• You weren’t told about the commission the adviser would receive from the lender.

Mis-sold investment examples

Some ways you might have been mis-sold your investment:

• You weren’t told how your money would be invested.
• You weren’t told about the risks involved.
• The product didn’t suit your needs or attitude to risk that you discussed with the adviser.

If you’ve been mis-sold a financial product

Act quickly

Be Aware

If you want to complain to the Financial Ombudsman Service there is a time limit of six years from when you were sold the product, orthree years from when you noticed (or ought reasonably to have become aware) something was wrong – whichever is later.

You can find out more on theFinancial Ombudsman Service website

If you want to complain to thePensions Ombudsman the time limit is three years from the event complained about, or three years from when you became aware (or ought to have become aware) of the event complained of. There are some very limited circumstances where the Pensions Ombudsman can investigate complaints that were not brought within the three-year period.

However, before going to the ombudsman services you need to complain to your provider. Read on to understand the process you need to follow.

Step 1 – Gather all the information you need

You don’t have to find concrete proof, but you do need to explain your problem.

• Gather all the relevant information and any written proof.
• Be clear and concise and stick to the facts.

Step 2 – Complain to your provider or adviser

• Ask for a copy of the firm’s internal complaints process – all firms should have one. It’ll tell you who to contact. Often you can find this on the firm’s website.
• The firm has eight weeks to respond. If they don’t get back to you, you can go straight to the ombudsman service.
• If you are unhappy with the firm’s final response, you have six months to take your complaint to the Financial Ombudsman Service and, in the case of the Pensions Ombudsman, three years from the event complained about or within three years of becoming aware of the event.

If the firm has gone out of business, you might still be able to get compensation – see the section further down the page.

Step 3 – Ask an ombudsman service to investigate

Time limits

If you are unhappy with the response to your complaint you must contact the Financial Ombudsman Service within six months of receiving the firm’s final response. The time limits for the Pensions Ombudsman are longer.

If you’re not happy with the firm’s response to your complaint, raise the matter with the Financial Ombudsman Service or the Pensions Ombudsman for pension-related issues. You might find it worth checking with the Pensions Advisory Service first for pension-related matters.

• An ombudsman service is independent, and willinvestigate your complaint for free.
• You have to have followed the firm’s official complaints procedure before you can use an ombudsman.

Usually you’d go to the ombudsman if the firm hasn’t given you a final decision within eight weeks – but if they’re helpful and keep you informed, you might want to wait a little longer. If your complaint relates to something that happened years earlier, it could take some time to find the relevant files and speak to the right people about it.

Generally the ombudsman’s decision is where things end, but if you’re still unhappy, as a last resort you may be able to take the matter to court. Think carefully before you do. Court cases are expensive, and there’s no guarantee you’ll win.

Find out more about the ombudsman service and how to complain:

The Financial Ombudsman Service

The Pensions Ombudsman

If the firm that advised you has gone out of business

Even if the firm has gone bust and can’t afford to pay you anything, you might be able to get compensation from the Financial Services Compensation Scheme.

Find out more about when and how you may be able to make a claim to the Financial Services Compensation Scheme in our guide below.

Compensation if you’ve lost money through mis-selling

Don’t pay for someone to manage your complaint about financial mis-selling

Think twice before paying a complaints company to make your complaint. You can get the same help for free from the Ombudsman Service, and you’re just as likely to win.