If your customer has lost out as a result of a mistake, there may be different types of compensation to consider. The information on this page is intended to help financial businesses understand our approach to making awards to compensate customers for an impact that isn't financial, such as for distress or inconvenience.
As well as awarding money – for example, paying an insurance claim, or refunding a charge – we may also tell you to do something that doesn’t involve money, such as correcting information on a credit file, or reinstating a no-claims discount.
In some cases, we’ll award compensation for the practical and emotional impact your mistake may have had – for example, for the upset an issue has caused your customer.
We can award fair compensation for any of the following:
- pain and suffering
- damage to reputation
More detail about the ways we can ask a business to resolve a complaint are set out in the Financial Conduct Authority's (FCA) handbook.
We have separate guidance available for consumers, that sets out what we take into account when you make a complaint.
When we might award compensation
We will make an award if we feel your customer faced obstacles or difficulties that could have been avoided if you’d handled things differently. For example:
- A customer had to contact you repeatedly to get something quite basic sorted out. For example, their address wasn’t updated when it should have been. They have not lost any money, but they had to spend more time and effort sorting this out than it should have needed.
- You underpaid your customer's pension for a significant amount of time, meaning they experienced reduced living standards. This is likely to have caused considerable long-term distress.
We share further detail, including some case studies, in the examples listed below. The examples give a broad overview of the things we think about when deciding fair compensation. But it's important to remember that we review each case on its individual merits – and consider the impact caused to the particular consumer specifically.
Our technical desk can give businesses and complaint handlers general information on how the Financial Ombudsman might look at a particular complaint.
When we might not award compensation
We're all inconvenienced at times in our day-to-day lives – and a certain level of frustration and minor annoyance is expected. So for us to make an award we'd need to see that the impact of a mistake was more than someone would expect to experience as part of everyday life.
There needs to be more than just a minor inconvenience or upset. For example, we're unlikely to award compensation for minor delays due to a business's phone line being busy, or for a typo in a letter, if it doesn't change the meaning.
We also don't compensate for the impact of events that were outside of the business's control, or for the effects of a third-party's action. For example, a customer might need to make a claim on their home insurance following a burglary. The event itself is distressing, but we wouldn't ask the insurer to pay compensation for the impact of the burglary.
However, if the claim wasn't handled properly, we might consider compensation for the extra upset this caused.
What we take into account
When we look at a case, we'll consider everything that's happened. If we decide to award compensation, we’ll say what level of award would be fair overall to put right the impact a mistake(s) had on the individual.
Customers that are vulnerable could be more severely impacted by a mistake. If that’s the case we’re likely to consider a higher award to reflect this, particularly if the business was aware of its customer circumstances.
The same mistake could have a different impact on different people. So we might award different amounts in similar cases. Below is an example where the same mistake happened to two individuals, but the impact on their lives significantly differed, which we had to take into account when making our decision.
Example of same mistake, different impact
A business sent Susan’s bank statement to the wrong address. The letter is picked up by a neighbour, who doesn’t open it but tells Susan. Susan complains as the business put her information at risk. The impact to Susan is the worry about what could have happened. We’d have to gauge just how much worry was caused to decide whether compensation was appropriate. If a consumer had recently had their identity stolen then this mistake could cause them to worry more. But generally speaking, stress caused by something that might have happened, but didn’t happen, wouldn’t usually warrant a large award.
Another business made a similar mistake. They wrongly sent information about a consumer to a relative's address. The letter is picked up by the relative, who accidentally opens it believing it’s for them. The relative tells the rest of the family about the consumer’s finances, causing a dispute. The impact to the consumer is the distress caused by the family dispute. The business’s mistake, though the same as in the above scenario, has had more distressing ongoing ramifications – and would likely result in a higher award.
Other factors we take into account
When we look at inconvenience and a customer's lost time, we may ask for evidence of how much time the customer spent sorting things out. We'd consider, for example, any lost wages (for instance, if they had to take a day off unpaid as a result of a business's error) when calculating the financial losses. But when deciding compensation for the inconvenience of unnecessary time spent in resolving an issue, we wouldn't use someone's hourly rate. We don't make awards based on units of time, and everyone's time is equally precious regardless of what a customer earns. Instead we decide fair compensation by looking at the overall impact the business's mistake had on the customer.
We also take into account whether there was anything the customer could have done to reduce the impact of the mistake on them. If we agree there were steps the customer could have taken, we might decide it's fair for a business to pay less compensation. A business's mistake can start a chain of events – and sometimes it wouldn't be fair to hold the business responsible for all the resulting effects on the customer. So we'll carefully consider the circumstances to decide what impact directly flows from the original error.
Complaints made on behalf of someone else
We don't normally pay compensation to someone else complaining on a customer's behalf, for example, a family member or solicitor. We also can't compensate executors personally, as they only represent an estate.
Complaints made by business customers
If the customer that’s been affected by a mistake is itself a business, charity or trust, those entities can’t experience distress – but an error could affect their operations or reputation. In those cases we’d consider whether an award for the inconvenience caused to them, or any damage to their reputation, would be appropriate.
Examples of awards for distress and inconvenience
The amount we award will depend on the individual circumstances. Here are some examples of the range of awards we might make.
You can find more case studies about compensation for distress and inconvenience in our collection of case studies by searching for 'distress and inconvenience'.
Typically an apology or small monetary award of less than £100 will fairly compensate a one-off incident or occurrence – such as a small administrative error or a short delay. An apology can often be enough to remedy these types of mistakes, as long as they cause minimal impact and are put right quickly.
Using financial services won't always be totally hassle-free and we wouldn't award for things that aren't more serious than the normal nuisances of everyday life. So just because there's been a mistake it doesn't necessarily follow that we would always award compensation – especially when the impact is minimal.
Read our case studies about when an apology or small monetary award was enough to remedy a mistake
- Consumer asks us to investigate error made with his pet insurance policy – Ibrahim asked us to investigate whether his insurer should pay him compensation for an administrative error it made during the renewal of his pet insurance policy.
- Consumer gets in touch about the wait for her car to be fixed – Elena contacted us when repairs to her car took longer than she was told, and she didn't accept the amount of compensation being offered.
...of up to £300
If an error has caused the consumer more than the levels of frustration and annoyance you might reasonably expect from day-to-day life, and the impact has been more than just minimal, then an apology won't be enough to remedy the mistake.
An award between £100 and up to £300 might be suitable where there have been repeated small errors, or a larger single mistake, requiring a reasonable amount of effort to sort out. These typically result in an impact that lasts a few days, or even weeks, and cause either some distress, inconvenience, disappointment or loss of expectation.
Read our case studies where an award of up to £300 was fair
- Consumer complains after payments from her credit card have been missed – Samaira got in touch after she noticed on different occasions that payments for her credit card hadn't gone out from her bank account and she'd had to get in touch herself to make sure the payments were made.
- Consumer complains it took too long for her mortgage lender to send her mortgage balance – Natasha brought a complaint to us after she had to make several requests before her mortgage lender sent through her outstanding balance, and she didn't think this was fair.
- Consumer complains after bank closes her account instead of twin sister's – Geraldine came to us after the bank had mistakenly closed her bank instead of her twin sister's.
...of up to £750
An award of over £300 and up to around £750 might be fair where the impact of a mistake has caused considerable distress, upset and worry – and/or significant inconvenience and disruption that needs a lot of extra effort to sort out. Typically, the impact lasts over many weeks or months, but it could also be fair to award in this range if a mistake has a serious short-term impact.
Read our case studies where an award of up to £750 was fair
- A consumer complains after a debt collector repeatedly contacts him over mistaken debt – Charlie had been dealing with a debt collector repeatedly contacting him about a debt he supposedly owned, even though they hadn't proven it. Even though he said he didn't owe the debt, they then started legal action, so he got in touch with us.
- Consumer complains after spotting fraudulent activity from her bank account – When Anna realised she'd been tricked into sending thousands of pounds to a fraudster, she told her bank she'd been a victim of fraud. But when her bank said it wasn’t responsible, she came to us for help.
- Couple complain after wrongly diagnosed boiler issue leaves them without hot water – Ron and James got in touch after they had been left without hot water or heating during the winter when engineers wrongly diagnosed the problem with their boiler and they felt their insurer hadn't done enough.
...of up to £1,500
An award of over £750 and up to around £1,500 could be fair where the impact of a business's mistake has caused substantial distress, upset and worry – even potentially a serious offence or humiliation. There may have been serious disruption to daily life over a sustained period, with the impact felt over many months, sometimes over a year. It could also be fair to award in this range if the business's actions resulted in a substantial short-term impact.
Read our case studies where an award of up to £1,500 was fair
- Consumer complains about how her insurer handled leak from her ceiling – Mary came to us about how her insurer had handled her claim when she discovered a leak in her ceiling, and found that the original repairs weren't effective and caused more problems.
- Consumer complains about how independent financial adviser dealt with transferring portfolio – Chris got in touch to complain after his husband died and his independent financial adviser made errors and delays in transferring the portfolio into Chris's name.
- Consumer brings complaint after bank refuses to refund lost money taken from him – Jamal came to us for help after he lost £50,000 over nine months. He said this was due to a third party and his bank had said it wouldn't refund him.
...of up to £5,000
An award of over £1,500 and up to around £5,000 is appropriate where the mistakes cause sustained distress, potentially affecting someone’s health, or severe disruption to daily life typically lasting more than a year. A mistake that has an extremely serious short-term impact could also warrant this level of compensation, but usually you’d expect some ongoing or lasting effects.
Examples at the higher end could include where the effects of the mistake are irreversible or have a lasting impact on someone’s health or even resulted in a personal injury.
Read our case studies where an award up to £5,000 was fair
- Consumer complains about insurer's handling of claim after bad experience on flight – Raj came to us after he had experienced severe trauma and distress from how his insurer had handled his case with a repatriation flight.
- Couple complain over investment advice given to supplement income for retirement – Andrew and Yvonne contacted us after being given advice to re-mortgage their home and invest in a high risk unregulated collective investment scheme.
- A consumer in difficult circumstances complains after her insurer sends correspondence to incorrect address – Selina relocated with her son and away from her abusive ex-husband. But an error made by her insurer meant her new address was revealed to her ex-husband, who tracked Selina and their son down.
...of £5,000 and over
Our highest awards, for the most extreme impact we see, go beyond £5,000.
Read a case study where an award over £5,000 was fair compensation
- Couple complains after their insurer took too long to repair damages caused by a leak in their kitchen – Aftab and Naima were advised by their insurer it would take two months to repair damages caused by a leak in their kitchen. Their insurer arranged temporary accommodation while the repairs were carried out. After it took over a year, Aftab and Naima discovered it had caused more problems impacting both their health and mental well-being.
Information for consumers
We have information for consumers on our understanding compensation for distress and inconvenience page.