Financial mis-selling is when we act based on inadequate or misleading financial advice and lose money as a result. Financial products and services should always be sold or presented to you in a way that is clear and straight-forward.
Check the Firm or Adviser is Authorised to give Advice
The company or individual who gave you financial advice or sold you financial products, must have been registered by the Prudential Regulation Authority (PRA) or Financial Regulation Authority (FCA) when you used them.
If not, you will not be eligible for protection against financial mis-selling. This is why it’s really important that you check that firms and advisers are regulated and authorised to give you advice.
You can do this by checking the FCA register and by looking at the Bank of England’s list of PRA regulated banks and building societies.
However, a firm being FCA or PRA authorised does not mean automatic protection from the Financial Services Compensation Scheme (FSCS) or Financial Ombudsman Service (FOS). This is because FCA rules usually only apply to mainstream products.
What do I do if I’ve Received Unfair, Incorrect or Misleading Advice?
The Financial Ombudsman Service
If you believe you have received improper advice, you should first complain to the business in question. If still unsatisfied with their handling of the matter after this, you can escalate the case to the FOS. The FOS is a free service, intended to help settle complaints between consumers and businesses which have provided financial services to them.
From April 2021 to March 2022, the FOS resolved 218,740 complaints. By clicking here, you can look at their key statistics on the most complained about products under banking and credit; insurance; investments and pensions; and claims management companies. This is worth doing if you want to see which financial products you might want to take a bit of extra care and research with when taking out.
The Financial Services Compensation Scheme
The FSCS covers your losses up to a limit of £85,000 per person, per financial institution, if you’ve experienced financial losses when a firm has gone bust.
It’s important to remember that different banks may be under the same financial institution within a banking authorisation. For example, if you have two separate bank accounts with £85,000 in each, you may not be able to get all of your money back from the FSCS if they shut down. This is because the banks may actually be owned by the same institution, meaning you would only be covered up to £85,000 worth of losses rather than £170,000 (£85,000 for each bank). Therefore, it’s a good idea to check which financial institution you bank is under and split your money between different ones if you hold more than £85,000.
The FSCS will also look at cases where you have been sold the wrong type of financial product or have been given poor advice, losing money as a result, but the individual or firm who supplied this has since gone out of business.