Compensation If You’ve Lost Money Through Mis-Selling

If you’ve been offered something that wasn’t right for you, but the company accountable has gone under it’s not all lost. You may be able to recover some money by claiming the Financial Services Compensation Scheme. Find out more about how it works and what you have rights in the case of fraudulently sold mortgages, insurance, and investment products, and how to claim.

How can you tell whether you’ve been sold a false product?

Mis-selling refers to all or some of the following:

The advice you received was not appropriate.
The risk wasn’t communicated to you.
The information you were given wasn’t what you required and got an item that wasn’t suitable for you.

In accordance with the guidelines set forth in the Financial Conduct Authority (FCA) the financial services should be advertised by you in a manner that is “fair and clear, but not deceitful”.

How does the Financial Services Compensation Scheme works

The Financial Services Compensation Scheme aims to provide assistance to those who have experienced financial losses after a company is shut down.

The scheme will compensate you within certain limits in the event that you make a loss in the event that any of these occurs:

Bank
Building society
credit union
Financial advisers or any other financial advisor
insurance company
Investment company.

It also considers instances where you’ve purchased an unsuitable product, and you’ve lost money, yet the company or person who offered you advice has since gone out of business.

We’ll explain in this article what to do if you’ve been unable to make it due to:

I was mis-sold a mortgage
Insurance companies that have been mis-sold
You have received poor investment advice or your investments were improperly managed.

What will the scheme not protect you from is

The Financial Services Compensation Scheme doesn’t cover you. Financial Services Compensation Scheme if:

The company that is responsible for the complaint is in operation – so you should be able to complain first, follow up with the Financial Ombudsman Service if you’re not happy
The company wasn’t authorized to operate by either The Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA) (see the next section of this guide to learn the best way to verify this
The company was located in the United States. however there are European financial service companies remain protected
The investment did not perform well or was sold incorrectly or you received incorrect information about the way it would perform.

To be covered under the scheme to protect you from misselling your advisor must be approved through the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA).

You can verify this information on the internet register. All you need is to be aware of what the title of the company or the adviser.

General insurance schemes and mis-selling

You are able to claim compensation from the Financial Services Compensation Scheme when you’ve been misled about an insurance policy for general purposes and the company who offered it to you went bankrupt. General insurance covers insurance products that include home, travel motor, pet health and protection insurance.

It’s when you’re sold an insurance policy that isn’t suitable for you.

An adviser or an insurance company could be accountable for mis-selling, If they:

Offer insurance to you that provides the possibility of redundancy insurance if you’re unemployed self-employed, retired or retired – this could mean that your claim could be rejected
We can offer you a policy, for example, travel insurance which you aren’t qualified for due to circumstances like your age or your location.

It is also possible to claim under the scheme in the following circumstances:

your financial advisor or broker was liable for money due to an unpaid claim, which was then settled with the company that insured you. However, the advisor or broker did not transfer the funds to you and has since gone under
you paid your advisor the money to pay your insurance premium , and they were shut down before paying it over to the insurance company.
You were the victim of fraud. For instance, if an advisor told you that the rates were higher than they really were , and you were able to keep the premiums in the middle.

What’s not covered?

Certain kinds of insurance aren’t included in the scheme.

They include:

reinsurance
credit insurance
Marine insurance
aviation insurance
Insurance for transport businesses.

The Financial Services Compensation Scheme doesn’t protect irresponsible lending claims against advisers or brokers located on Isle of Man, the Channel Islands or Isle of Man.

How much can you afford?

This is contingent on the type of insurance you claim for.

In the case of compulsory insurance such as third-party auto insurance, you could be able to claim the full amount of of your claim. Other kinds of insurance in which you can receive 100% of the amount made available to you are annuities, life insurance, assurance, and Income protection insurance. Find more details on the FSCS website. It opens in a new window

For different types of insurance, such as house contents insurance The Financial Services Compensation Scheme can provide up to 90% of amount in the case.

If, for instance, you were to lose £200 then the maximum amount the scheme would pay you is £180.

It is not a limit on what can be paid but you are only able to receive 90% of any valid claim.

The scheme and mortgage mis-selling

If you’ve received bad advice on a mortgage and the company that gave the advice is now out of business and you’ve lost your job, it is possible that the Financial Services Compensation Scheme might be able pay compensation for any loss you’ve endured as a result of that bad advice. Mortgages that are buy-to-let and secured by your property cannot be covered under FSCS.

You could be eligible to claim it if such as:

You were advised to self-certify your income’ and you were able to get the most expensive mortgage you required
you were offered a mortgage which wasn’t appropriate for your needs at that time, because you weren’t informed properly regarding the options available
you were offered a mortgage which you’d have to pay off after retirement and the adviser did not make sure that you’d have the ability to pay the mortgage.
You were advised to change mortgages, but you weren’t provided with the proper explanation for why it was necessary to change and the recommendation to switch could have resulted in losing the money.

What price can you expect to pay?

The scheme is able to be paid out in the event of financial loss and the maximum amount you receive is contingent upon when the company in question went bankrupt and was declared ‘in default according to the plan.

In default as of or after April 1, 2019 – the scheme could be able to pay up to £85,000 for each creditor for mortgage mis-selling claims to a company.
The default was declared between 1 January 2010 and March 31, 2019 – the plan will pay up to £50,000 for mortgage-related mis-selling claims against a company.
In default prior to 1 January 2010, the plan will be paid the first £30,000 and 90% of following £20,000, with the maximum amount of £48,000 of your mortgage’s mis-selling claims to one company. If, for instance, you lose £30,000, you could receive it all back, however, If you lose £45,000, you may only receive £43,500.

Poor investment advice or poor investment management

You may be eligible to claim benefits for compensation from Financial Services Compensation Scheme if you’ve lost money due to bad investment advice on:

managed funds
Shares and stocks
personal pension plans
long-term investments such as mortgage endowments.

It is only possible to apply for this scheme in the event that the firm who gave you the recommendation was closed.

If that’s not the case it’s best to talk with the company first.

You don’t have a right to compensation because your investment is performing poorly or you make a loss.

Your loss has to be the result of any one of the following:

False or inaccurate advice
Investments that are not properly managed
Fraud or false representation (for example, if , for instance, you were told that the investment was a specific kind of investment but it was not and you believed what you were told prior to purchasing this investment).

If you requested an investment that has a low chance loss of your funds, and your advisor recommended an investment that is high-risk there is a chance that you could have an opportunity to claim compensation in the event that you lose money due to.

However, if you made a conscious decision to take on a risky investment and then lost a small portion of your capital then you would not be able to file any claim.

What is the best price you can get?

The scheme can only pay out in the event of financial loss, and the maximum amount you receive is contingent upon when the company involved went under and was declared in default through Financial Services Compensation Scheme. Financial Services Compensation Scheme.

If declared in default, or after April 1, 2019. The scheme could provide a maximum of £85,000 per person eligible per firm for fraudulent claims.
The scheme was declared in default between January 2010 and March 31, 2019 – the scheme will be liable for a maximum amount of £50,000 to settle claims against one company.
If declared in default prior to 1 January 2010, the scheme is able to be paid the initial £30,000 as well as 90% of the following £20,000 in the case of an maximum of £48,000 in a mis-selling claim made against one firm. If, for instance, you lose £30,000, you could receive it back in full however if you lose £45,000, you could only get £43,500.

How do you present a claim?

If the company you worked with was authorized to do business by either an agency such as the FCA or PRA and is now into administration, then you may seek compensation for any amount due to you through the Financial Services Compensation Scheme.

You can submit claims online through the Financial Service Compensation Scheme’s site or download the claim forms and mail them back.

It is also recommended to file an insolvency claim with the practitioner – for example, the administrator, or liquidator who is accountable for the business you worked with.