Understanding compensation for distress or inconvenience
We understand that a business's mistake can affect you practically or emotionally, as well as financially.
This page sets out compensation we can ask the business pay you if its mistake caused you distress or inconvenience. It covers:
On this page
Complaints we can help with
Find out how we resolve complaints about different types of financial product or service.
How we award compensation for distress or inconvenience
In each case that we uphold, we consider whether to award compensation for how you've been affected practically or emotionally.
We listen carefully to both sides, looking at the facts and evidence to assess the impact and decide what's fair.
For us to make an award for distress and inconvenience, we need to see that the impact of a business's mistake was more than a minor annoyance such as a business's phone lines being busy.
We don't compensate for the impact of events that were outside a business's control or for the effects of a third party's action. For example, you might need to make a claim on your home insurance following a burglary, but we wouldn’t ask the insurer to pay for the distress that the burglary caused.
However, if the claim wasn't handled properly, we might consider awarding compensation for the extra upset this caused.
If we decide to award compensation, we’ll say how much is fair according to the impact any mistakes had on you as an individual. The same mistake could have a different impact on different people, so we might award different amounts in similar cases.
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Susan’s bank sent her statement to the wrong address. Her neighbour gave it to Susan without opening it, but Susan was unhappy that the business had put her information at risk.
Susan was distressed by the worry of what might have happened if her neighbour hadn’t given her the bank statement. But generally speaking, stress caused by something that might have happened, but didn’t happen, wouldn’t usually warrant a large award.
Roland’s bank sent his statement to his father’s address, and his father opened it believing it was for him. The father told the family about Roland’s finances, causing an argument.
Roland’s bank made the same mistake as Susan’s, but it had worse consequences. For that reason it would likely result in a higher award.
We may also ask you about:
- Details about what you did to sort out the business's mistake and how long this took. When considering this, we don’t usually look at thing like someone’s hourly rate, but the wider impact the business's mistake had on you.
- The impact on your health and for more details to show how you’ve been affected.
- Whether you could have done anything to reduce the impact of the business’s mistake. A mistake can start a chain of events and so we need to carefully consider the circumstances and decide what impact resulted from the original mistake.
If someone else is making a complaint on your behalf
We don't normally pay compensation to someone else complaining on your behalf, for example, a family member or solicitor.
We also can't compensate executors personally, as they only represent an estate.
Compensation for limited companies, sole traders and partnerships
If your limited company has been inconvenienced, we can award compensation for this.
We can only pay compensation to the company itself. As the limited company will be the customer of the business, we couldn't pay the compensation to you or anyone else personally as a shareholder or director.
However, if you're a sole trader or a partner in a partnership, you can make a complaint about something that's affected your business. As your business isn't a separate legal entity, you can generally receive compensation personally.
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.
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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 is usually 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 hassle free. We wouldn’t award for things that aren’t more serious than the normal nuisances of everyday life. Just because there’s been a mistake it doesn’t necessarily mean that we would always award compensation, especially when the impact is minimal.
Read case studies where an apology or small monetary award was enough to remedy a mistake.
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An apology won’t be enough to remedy the mistake if:
- an error has caused more than reasonable levels of frustration and annoyance you might expect from day-to-day life
- the impact has been more than just minimal
An award between £100 and £300 might be fair where there have been repeated small errors, or a larger single mistake, requiring a reasonable effort to sort out.
These typically result in an impact that:
- lasts a few days or even weeks
- cause either some distress, inconvenience, disappointment or loss of expectation.
An apology won’t be enough to remedy the mistake if:
- an error has caused more than reasonable levels of frustration and annoyance you might expect from day-to-day life
- the impact has been more than just minimal
An award between £100 and £300 might be fair where there have been repeated small errors, or a larger single mistake, requiring a reasonable effort to sort out.
These typically result in an impact that:
- lasts a few days or even weeks
- cause either some distress, inconvenience, disappointment or loss of expectation.
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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
- 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.
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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
- potentially 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.
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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,
- 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, although you would usually expect some ongoing or lasting effects.
Examples at the higher end could include where the effects of the mistake:
- are irreversible
- have a lasting impact on someone’s health
- resulted in a personal injury.
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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.
In some cases, the law requires the business to deduct income tax at the basic rate from any compensation it pays you – whether or not you’re a taxpayer. But you may still have to pay tax on compensation, depending on:
- the type of compensation you’ve been awarded
- your financial position – any tax due will depend on your individual circumstances.