If we uphold a consumer's complaint, our general approach is to tell the financial business to put the consumer into the position they would have been in, if the original problem that led to the complaint hadn't happened.
Where we uphold a consumer's complaint (wholly or partly), we also consider whether it is appropriate to tell the business to pay the consumer compensation. We do not do this in every case.
Exceptionally, we may tell the business to compensate the consumer for distress and inconvenience it has caused by handling the complaint poorly - even if we do not uphold the actual complaint itself.
There are two types of compensation we can tell a business to pay a consumer:
There is more information in our online technical resource on is compensation taxable.
We can tell a financial business to pay the amount of compensation that we consider fair, up to the maximum limit of £150,000 - excluding any interest and costs (£100,000 for complaints we received before 1 January 2012).
This limit applies whenever we tell a business to compensate a consumer or to pay money for the consumer's benefit - for example, to add an amount to the value of an investment. Most cases we deal with are not affected by this limit.
If we believe that fair compensation exceeds £150,000, the ombudsman can tell a business that it has to pay up to this limit and can recommend the business pays any additional amount as well.
The amount we tell a financial business to pay as compensation does not have to be a specific amount. It can be expressed as a:
A formula or direction are also both subject to the maximum limit of £150,000 (£100,000 for complaints we received before 1 January 2012). This limit applies, for example, where we direct a business to:
The £150,000 limit (£100,000 for complaints we received before 1 January 2012) applies to the total compensation.
For example, if a financial business has already offered £130,000 but the consumer is asking for a further £50,000 - and we agree with the consumer - this is treated as total compensation of £180,000 and so is caught by the limit.
We can tell a financial business to pay a consumer interest on compensation, costs and interest on costs. These are not subject to the £150,000 limit. This means, for example:
As soon as we suspect that the £150,000 limit (£100,000 for complaints we received before 1 January 2012) might be exceeded, we will usually write to the consumer and the financial business to tell them (see our consumer factsheet on compensation over £150,000). The consumer can then:
Where we assess fair compensation as being more than £150,000, we can tell the business to pay £150,000 compensation (plus any interest and costs) - and recommend that the financial business pays the balance of the compensation. It is up to the financial business whether or not it pays the balance.
There has been legal action in the courts to clarify the position about whether a consumer who has accepted our decision can then go on to pursue the business for further compensation. It seems very unlikely that a consumer could do so. However, whether or not we uphold their complaint, the consumer may wish to consider getting their own independent legal advice before deciding whether they would be better off taking a financial business to court.
There are time limits that apply for taking cases to court - and these will continue to run while a case is with us.
contact our technical advice desk on 020 7964 1400
This is part of our online technical resource which sets out our general approach to complaints about a wide range of financial products and issues. We would like your feedback on how helpful you found it. Please also use the feedback form below to tell us about anything you think we could clarify or explain better.