Compensation

If a business has made a mistake or treated you unfairly and you’ve lost out as a result, we have the power to put things right. Usually, we’ll tell the business to put you back in the position you’d be in if they hadn’t got things wrong.

There are a number of things we can tell a business to do to put things right. These include:

• paying you money for financial loss
• putting things right in a way that doesn’t involve paying money
• paying you money to recognise the impact of what went wrong.

We can also tell a business to pay interest on our awards, and in rare circumstances, pay costs.

Most of the time, we’ll tell the business to pay compensation directly to you.

But there may be exceptions. For example:

• if you owe money to the business, we might say it’s reasonable for it to offset any compensation against what you owe
• if you’re insolvent, we may say the business needs to pay the compensation from your complaint to the trustee or practitioner of your insolvency arrangement.

We might decide the business should also pay you interest on top of compensation. We can award interest:

• as part of a money award, or 
• because you were deprived of the use of money.

Whether interest should form part of the money award – and at what rate – will depend on the facts of the case.

We sometimes award interest, in addition to a money award, to compensate for being deprived of the use of the money for a relevant period of time. In complaints referred to us:

• from 1 January 2026, we typically ask financial businesses to calculate this using a time-weighted average of the Bank of England base rate plus one percentage point
• before 1 January 2026, we typically ask financial businesses to use a rate of interest at 8% simple a year.

Where an ombudsman makes a money award – and you accept their decision – they may also say that the financial business has to pay higher interest if it doesn't make the payment by a set deadline. The typical deadline we set is 28 calendar days from the date the financial business is told you have accepted the final decision.

The default interest rate applied for late payment is 8% simple a year.

The limit an ombudsman may award applies to interest included in a money award. It does not apply to interest to:

• being deprived of money, or
• delayed payments.

Costs awards aren’t common, but we will think about what’s fair in each individual case. Occasionally, we might tell a business to reimburse some or all of the costs you reasonably incurred.

A business’s mistake can affect you practically or emotionally, not just financially. For this reason, the rules we follow say that we can award fair compensation to recognise other types of impact, for example the distress, inconvenience or other practical problems caused by the dispute.

Find out more about when we award compensation for distress or inconvenience. 

We might decide a business needs to put things right in a way that doesn’t involve paying money. For example, amending your credit file, or directing the business to do something.

In some cases, the law requires the business to deduct income tax at the basic rate, whether or not you’re a taxpayer.

Find out more about how tax may apply to a compensation payment.

If you accept an award made in an ombudsman's final decision, it’s unlikely you’ll be able to take the business to court for more compensation later. We can’t give you legal advice about this, so you’ll need to speak to get independent legal advice if that’s something you’re considering, before you accept any award.

There are time limits on taking a case to court, and these continue to run while we handle your case. Again, you should get independent legal advice if this is relevant to you.