If you’ve been offered an item that was not suitable for you and the company accountable has gone under there’s no reason to worry. It is possible to recover some money by claiming the Financial Services Compensation Scheme. Learn more about the scheme and what you have rights with regard to fraudulently sold mortgages, insurance, and investment products, and how to you can claim.
How can you tell whether you’ve been sold a false product?
Misselling can refer to any 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 needed , and got an item that wasn’t suitable for you.
According to the regulations set out in the Financial Conduct Authority (FCA) Financial services have to be offered at a manner that is “fair and transparent, and not deceiving”.
What is the Financial Services Compensation Scheme works
The Financial Services Compensation Scheme aims to provide assistance to those who have experienced financial losses in the event that a business has been shut down.
The scheme will provide compensation 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 advisor or another financial advisor
insurance company
Investment company.
The book also examines cases where you’ve purchased the wrong product and have lost money, and the person or business that offered you advice is now no longer in business.
This article will explain what you should do if you’ve been unable to make it due to:
I was mis-sold a mortgage
Insurance companies that have been mis-sold
If you’ve received poor advice on investing, or your investments were poorly managed.
What will the scheme not protect you from is
The 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 was not authorised through authorities such as the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA) (see the next section of this article for how to confirm this
The company was located in the United States. but certain European financial service companies are protected
The investment did not perform well or was sold incorrectly or you received false information regarding how it would do.
In order to be covered under the scheme for misleading your adviser has to be approved through the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA).
You can look this up on the internet register. You just need to be aware of what the title of the company or the adviser.
General insurance schemes and mis-selling
You may be eligible for compensation through the Financial Services Compensation Scheme when you’ve been misled about an insurance policy for general purposes and the company who provided the policy to you has gone bankrupt. General insurance covers items like home, travel motor, pet health and protection insurance.
It’s when you’re sold an insurance policy that isn’t suitable for you.
A financial adviser or insurance company could be in the wrong for mis-selling If they:
Offer insurance to you that provides the possibility of redundancy insurance if you’re not working either retired, self-employed or retired. this could mean that your claim could be denied
We can offer you a policy, like travel insurance, which you aren’t qualified for due to circumstances like your age or the place you live.
You may also be able to claim benefits under the scheme in the following circumstances:
Your financial advisor or insurance broker owes you 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 have since gone under
you paid your advisor the cash for your insurance premium , and they were shut down before the money was transferred to the insurance company.
you’ve been a victim of fraud. For example, if your advisor told you that the prices were more expensive than they really were , and retained the premiums in the middle.
What’s not covered?
Certain kinds of insurance aren’t covered by the scheme.
They include:
reinsurance
credit insurance
Marine insurance
aviation insurance
Transport business insurance.
The Financial Services Compensation Scheme doesn’t provide coverage for claims against advisers and brokers who are based within or on the Channel Islands or Isle of Man.
What is the best price you can get?
It depends on the type of insurance you claim for.
In the case of compulsory insurance such as third-party auto insurance, you may be able to claim the full amount of of your claim. Other kinds of insurance in which you can receive the full amount made available to you are annuities, life insurance, assurance, and the income insurance. Find more details on the FSCS website. It opens in a new window
Other types of insurance such as home contents coverage for example, the Financial Services Compensation Scheme can cover 90 percent of the amount for the irresponsible lending claims.
For instance, if 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 however you will only receive 90% of any valid claim.
The scheme and mortgage mis-selling
If you’ve received poor advice on a mortgage and the company that gave the advice has gone 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 been able to suffer as a result of the poor advice. Mortgages that are buy-to-let and that are secured by your home cannot be covered under FSCS.
You could be eligible to claim the right to use the service if you, for instance:
You were advised to self-certify your income’. You then got the most expensive mortgage you could have
You were offered a loan that wasn’t suited to those at that point, because you weren’t properly informed regarding the options available
you were offered a mortgage that you’d still be paying off when you retired and the advisor didn’t make sure that you’d have the ability to pay the mortgage.
You were advised to change mortgages, but were not given sufficient explanations of the reasons to switch and the suggestion to switch could have resulted in losing the money.
What price can you expect to pay?
The scheme is able to pay for losses incurred by the company and the maximum amount you receive is contingent upon when the company involved went under and was declared ‘in default as per the program.
If you are declared in default before or after April 1, 2019 – the scheme could provide up to £85,000 per qualified person to settle your claim for mortgage mis-selling against a company.
The default was declared between 1 January 2010 and March 31, 2019 – the plan could pay up to £50,000 for mortgage-related mis-selling claims against a company.
In default prior to 1 January 2010, the plan will pay the first £30,000 , and 90 percent of your following £20,000, with an maximum of £48,000 from the mortgage’s mis-selling claims against one company. If, for instance, you were to lose £30,000, you may be able to get the entire amount back, however in the event that you lose £45,000, you may only receive £43,500.
Inadequate investment advice or inadequate investment management
You may claim compensation for compensation from Financial Services Compensation Scheme if you’ve suffered losses due to inadequate investment advice regarding:
managed funds
Shares and stocks
personal pension plans
Long-term investments, such as mortgage endowments.
You can only join this scheme in the event that the firm who gave you the recommendation was closed.
If this isn’t the situation it’s best to talk with the company first.
There is no right to compensation because your investment has a poor performance or you make a loss.
The reason for your loss is because of one of the following:
False or inaccurate advice
poor management of investments
fraudulent or misleading (for example, if , for instance, you were told that the investment was a certain type of investment, but it wasn’t and you believed the information you received when purchasing an investment).
If you sought an investment with a low chance that you’ll lose your investment, and your adviser suggested an investment with a high risk there is a chance that you could have an action for compensation in case you lose money due to.
However, if you had deliberately taken an investment with high risk and then lost a small portion of your investment and then refunded it, you won’t be able to make any claim.
What is the best price you can get?
The scheme only pays out to cover financial losses and the maximum amount you get is determined by the date the company in question went bankrupt and was declared to be in default as per Financial Services Compensation Scheme. Financial Services Compensation Scheme.
In default as of or after April 1, 2019, the plan could provide a maximum of £85,000 for each eligible person per firm for fraudulent claims.
The scheme was declared in default between January 2010 and March 31, 2019 – the scheme will provide a maximum of £50,000 to settle claims against a single firm.
If declared in default prior to 1 January 2010, the scheme is able to provide the first £30,000, and 90 percent of the following £20,000 to an maximum of £48,000 in a mis-selling claim made against one firm. If, for instance, you were to lose £30,000, you may receive it back in full If you were to lose £45,000, you could only get £43,500.
How do you present a claim?
If the company you dealt with was licensed through an agency such as the FCA or PRA and is now into administration, then you are able to seek compensation for any amount that you owe from the Financial Services Compensation Scheme.
You can submit an online claim on the Financial Service Compensation Scheme’s site or download the claim forms and return them.
You must also file an insolvency claim with the practitioner – for example, the administrator, or liquidator who is accountable for the business you worked with.