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ombudsman news

issue 71

August 2008

ombudsman focus: compensation for distress, inconvenience or other non-financial loss

Where we uphold a complaint - whether wholly or in part - we will require the business concerned to recompense the consumer for any financial loss it has caused. In certain situations, we may consider that the business has also caused the consumer such a degree of distress, inconvenience or other non-financial loss that it should pay an additional amount as compensation.

The approach we follow when considering whether such compensation may be warranted in a particular case is set out in our technical note, compensation for distress, inconvenience or other non-financial loss.

This note covers a number of issues including:

  • what is meant by "distress", "inconvenience" and "pain and suffering";
  • whether this was the fault of the financial business;
  • the types of situations where we consider compensation for distress or inconvenience;
  • whether the degree of distress or inconvenience was material; and
  • how we assess any compensation.

The following examples reflect some actual decisions made in cases referred to us - and provide a broad illustration of our approach. Further examples are given in the technical note on our website. Assessing the appropriate amount to be awarded in any particular case depends on the individual circumstances of that case.

cases where the ombudsman awarded modest compensation (less than £300)

  • Mrs G contacted her bank to say it had made an error when transferring funds into her current account. The bank apologised and said it would put things right immediately, but the problem persisted. Mrs G had to phone the bank on a number of occasions, and to write twice to the head office, before the mistake was finally sorted out.
  • After a fire caused serious damage to their house, Mr and Mrs N and their young family moved into alternative accommodation, paid for by the insurer. Unfortunately, the insurer gave the contractors inaccurate information about the extent of the repair and redecoration work needed on the house. As a result, the family had to stay in the alternative accommodation, paid for by the insurer, for three weeks longer than should have been necessary.

cases where the ombudsman awarded significant compensation (£300 - £999)

  • Mr B's spending on his credit card was well within his credit limit. So when he tried to use the card in his local supermarket, he was surprised to learn that the payment had not been approved. The card company apologised for the "technical error" - and told him the problem had been put right. However, Mr B continued to have difficulties with his card, causing him repeated embarrassment in local shops, over several months.
  • Mrs D was caused considerable distress when her insurer persisted in addressing all its queries to her deceased husband - not to her. Mr D had died in a car accident only a couple of days after he had submitted a claim for flood damage under their buildings insurance. When she received an acknowledgement of the claim, Mrs D phoned the insurer to let it know her husband had died. However, the insurer continued to address all letters about the claim to Mr D. It even rang Mrs D at home on one occasion and asked to speak to her husband about the claim.

cases where the ombudsman awarded exceptional compensation (£1,000 or more)

  • Mr J owned a small factory that was one of the main employers in the town. The bank wrongly "bounced" a cheque he had sent to one of his chief suppliers. The cheque was eventually paid, several weeks later. By then, however, Mr J had been caused a great deal of embarrassment within the local community. He spent a significant amount of time contacting his suppliers and customers - to try to stop the adverse effects of a whispering campaign.
  • Mr T had only recently retired when it came to light that the investment business had made a significant error in connection with his pension policy. He had to consider starting work again to make up for the resulting shortfall in his personal pension.
  • When Miss J left her partner, Mr C, who had a history of violent behaviour, she moved to a different town and asked her bank not to let Mr C know where she was living. The bank was fully aware of her difficult circumstances and assured her it would keep her details confidential. However, it disclosed her new address to Mr C. He subsequently broke into her home and assaulted her, causing her to spend several days in hospital.


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ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.