Authorised firms must have formal complaints procedures and belong to the Financial Ombudsman Service (FOS), which resolves disputes between a firm and its customers.
As a last resort, if an authorised firm goes bust owing money to its customers, there is a compensation scheme in the UK that may step in and pay compensation.
Making a complaint through the FOS
If you have a problem with a financial product, service or advice from an authorised firm, first complain to the firm involved. It is obliged to acknowledge your complaint within four weeks (30 days) and must resolve your complaint within eight weeks.
If you have not had a response within this time or the complaint has not been upheld, you can take your case to the FOS.
The ombudsman can order a firm to put matters right and pay you compensation of up to £150,000.
If you're unhappy with the ombudsman’s verdict, you can bring a court case against the firm.
However, this can be a time-consuming and costly experience, whereas going to the FOS is free and requires no legal representation.
Claiming compensation through the FSCS
If you've lost money because of an authorised firm’s dishonesty or negligence, normally, you'd seek compensation through the firm (using FOS if your complaint is not originally upheld).
But your chances of getting money from the firm evaporate if the firm goes out of business.
In that situation, you can make a claim through the Financial Services Compensation Scheme (FSCS), which might refund some or all of the money.
The FSCS pays compensation of up to £50,000 per person, per firm for investment products. This will increase to £85,000 in April 2019.
Find out more in our guide to how your investments are protected.
Remember, investment risk isn’t covered
In general, the law and FCA rules do not protect you from investment risk. It’s in the nature of many investments that you might lose money and that is a risk you accept in return for the potential of a higher return.
So if your investments have lost money, you cannot raise a complaint about the performance (unless you have evidence of mismanagement or negligence).
However, if you take advice on your investments and the adviser failed to make sure you understood the risks you were taking, you might have a valid complaint if you lose money as a result.