If your adviser has gone bust and you’ve lost money because of their negligence, you might be able to get something back through the Financial Services Compensation Scheme. Check your rights for mis-sold mortgages, pensions, insurance and other investments and find out when and how to make a claim.
The Financial Services Compensation Scheme can pay compensation up to certain limits if you lose money when a:
It also looks at cases where you have been sold the wrong kind of product and lost money, and the person or company that gave you the advice has gone out of business.
Here we explain what to do if you have lost out because of:
You are not covered by the Financial Services Compensation Scheme if:
Just because a firm is authorised does not mean you’re automatically covered by the FSCS or FOS. Even if you’re using an authorised firm, FCA rules only generally apply to mainstream products, rather than ‘niche’ investments, which might be completely unregulated.
For you to be covered by the scheme for mis-selling your adviser must have been authorised by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA).
You can easily check this on the online register – you just need to know the name of the firm or adviser.
You can claim compensation from the Financial Services Compensation Scheme if you have been mis-sold a general (as opposed to investment) insurance policy and the company that sold it to you has gone bust.
Mis-selling is where you’re sold a policy that is unsuitable for you.
An insurance company or adviser might be guilty of mis-selling if they:
You might also be able to make a claim under the scheme if:
Some kinds of insurance are not covered by the scheme.
The Financial Services Compensation Scheme doesn’t cover claims against advisers or brokers based in the Channel Islands or Isle of Man.
That depends on the kind of insurance your claim is for.
For compulsory insurance like third-party car insurance, you should get back the full amount of the value of the claim.
For other kinds of insurance like house contents cover, the Financial Services Compensation Scheme can pay 90% of the value of the claim.
For example, if you lost £200 then the maximum compensation the scheme could pay would be £180.
There is no limit to what will be paid out but you can only get 90% of any claim.
If you have been given bad advice about a mortgage and the firm that gave you advice has gone out of business, the Financial Services Compensation Scheme might be able to pay you compensation for any loss you have suffered because of the bad advice.
You might be able to claim if, for example:
The scheme can only pay out for financial loss and the maximum you can get depends on when the firm involved went bust and was ‘declared in default’ by the scheme.
For example, if you lost £30,000 you could get it all back, but if you lost £45,000 you could get only £43,500 back.
You can claim from the Financial Services Compensation Scheme if you have lost money because of poor investment advice about:
You would only apply to the scheme if the company that gave you the advice has gone out of business.
Otherwise you should talk to the company itself first.
You aren’t entitled to compensation just because an investment performs badly or you lose money.
Your loss must be because of any of the following:
For example, if you asked for an investment with a very low risk of losing your money and your adviser recommended a high-risk investment, you might have a claim for compensation if you lost money as a result.
But if you deliberately took on a high-risk investment and then lost some of your money, you would not have a claim.
The scheme will only pay out for financial loss and the maximum you can get depends on when the firm involved went bust and was ‘declared in default’ by the Financial Services Compensation Scheme.
For example, if you lost £30,000 you would get it all back, but if you lost £45,000 you would get only £43,500 back.
Before claiming you should:
You should always see if you can claim your money back from the liquidator first. If that doesn’t work, you can then claim from the Financial Services Compensation Scheme.
You can make a claim online on their website or print off the documents and post them back.
This article is provided by the Money Advice Service.