I think I’ve been mis-sold a financial product, what can I do?

What is financial mis-selling?

The Financial Conduct Authority (FCA) - which regulates financial services and markets in the UK - states that financial services must be sold to you in a way that is fair, clear and not misleading.

Financial mis-selling can occur when you experience one or more of the following when buying a financial product:

• You were given bad or unsuitable advice
• The risks associated with the financial product were not explained to you
• You were not given the full information you needed when you took on the financial product and so ended up with a product that’s not right for you
• You weren’t told about additional charges and fees which you’ve incurred following advice
• You experienced hard sales tactics and felt uncomfortable or pressured into an investment that you didn’t really need or want

Examples of mis-sold financial products

Car finance

The FCA is investigating whether some customers may have been charged too much due to discretionary commission arrangements on car finance loans sold before January 2021.

Millions of UK drivers could be due compensation.

The FCA says you may be affected by the issue if:

• You bought a car under a finance scheme (such as hire purchase or personal contract purchase) before 28 January 2021
• There was a discretionary commission arrangement between your lender and broker.

You might not already know if your broker and lender had a discretionary commission agreement, but they should be able to tell you if you contact them.

Find out more about car finance mis-selling and use our free letter template to complain.

Payment protection insurance (PPI)

This is the most widely known example of financial mis-selling.

PPI was an insurance product sold alongside credit cards, loans and many other finance agreements. It was meant to ensure that payments would be made if the borrower was unable to make them due to sickness or unemployment.

Huge numbers of policies were mis-sold because the policyholders would never have been able to claim on the insurance.

After PPI mis-selling came to light, there was a deadline of 29 August 2019 to make a claim. However, it is still possible to start a claim in 'exceptional circumstances'.

Mis-sold mortgages and endowments

This form of financial mis-selling can occur if you were advised to borrow money without proving your income (also called self-certifying) or asked to overstate your income in order to borrow more.

You might have also been mis-sold a mortgage if you were advised to switch lenders without being informed of the fees and penalties.

If you were given a fixed-rate mortgage and told to remortgage to a better deal later on, and incurred penalties for leaving the fixed rate early, this might also be a case of mis-selling.

Mis-sold investment products

If you weren’t given the correct information or weren’t told how your money would be invested or the risk involved with that investment, you might have been mis-sold the investment product.

Mis-selling of investment products can also occur if you discussed your needs and attitude to risk with the adviser and you find the investment product sold to you doesn’t match this.

If the investment sounds too good to be true, check whether the advisor is registered with the FCA. 

Mis-sold self-invested personal pension (Sipp)

Sipps allow you to hold multiple investments and products, so you can manage your pension fund yourself and have more control over where it’s invested.

But Sipps are considered riskier than most personal pension schemes, and were created to allow experienced investors the opportunity to take more risks.

Because of the risky nature and high fees associated with Sipps, it is widely believed they shouldn’t have been recommended to the unsuspecting general public.

If you lost a large portion of your pension fund as a result of poor advice, corrupt advisers, hard sales or pressure selling or a lack of advice given on the high fees associated with Sipps, it is likely you were mis-sold.

Complain to your provider if you were mis-sold

Explain the problem to your provider. Be as clear as possible about why you think you were mis-sold the financial product.

If you have written evidence it will help your complaint to send a copy of this as proof, but this isn’t essential.

As for the provider’s complaints procedure - they should have one.

After you’ve made your complaint, the firm has eight weeks to respond.

If they don’t get back to you, go straight to the ombudsman service and ask them to investigate.

Complain to the FOS

If you’re unhappy with the firm’s response, you can take your complaint to the Financial Ombudsman Service (FOS).

The FOS has a time limit of six years from when you were sold the product, or three years from when you noticed (or reasonably became aware) something was wrong – whichever is later.

Complain to the Pensions Ombudsman

If you were mis-sold a financial product relating to your pension, you also have the option to complain to the Pensions Ombudsman.

You have three years from when you were mis-sold to make a complaint. If you became aware that you were mis-sold later, you can apply within three years of becoming aware of this.