In­vestors wronged by a fi­nan­cial firm in line for twice the pay­back

The Daily Telegraph - Your Money - - MONEY - Laura Miller

Pen­sion­ers and in­vestors left worse off by the sharp prac­tices of pro­fes­sion­als trusted with their money can ex­pect a sig­nif­i­cant improve­ment in their fi­nan­cial pro­tec­tion.

City watch­dog the Fi­nan­cial Con­duct Author­ity (FCA) plans to in­crease the com­pen­sa­tion limit for con­sumers where a fi­nan­cial com­pany has cost them their sav­ings.

Com­plaints should go to the Fi­nan­cial Om­buds­man Ser­vice (Fos), which has the power to de­cide your case and award com­pen­sa­tion with the aim of putting you back in the sit­u­a­tion you would have been in had you not been wronged.

Cur­rently the ser­vice can only award up to £150,000 – of­ten much less than in­vestors have lost. It can tell the of­fend­ing com­pany to pay more than this limit, but can­not force it to do so.

The FCA has pro­posed more than dou­bling this limit to £350,000. Peo­ple who suc­cess­fully com­plain to the Fos about prob­lems oc­cur­ring on or after Apr 1 2019 would be en­ti­tled to the higher pay­back limit.

For com­plaints about prob­lems that hap­pen be­fore Apr 1 2019, and which are re­ferred to the Fos after that date, they would be in line for com­pen­sa­tion of up to £160,000. From Apr 1 2020, both lim­its would in­crease in line with in­fla­tion.

How­ever, for con­sumers who re­fer com­plaints to the om­buds­man ser­vice be­fore Apr 1 2019, the limit will re­main at £150,000.

Gen­er­ally, con­sumers can bring a com­plaint to the Fos within six years of the event they are com­plain­ing about or, if later, within three years from when they could rea­son­ably have known they had cause to com­plain. It must also be within six months from the busi­ness send­ing the con­sumer a fi­nal re­sponse.

The FCA is con­sult­ing on the changes and has said it will re­port back on its de­ci­sion in the new year.

Its anal­y­sis sug­gested there could be around 2,000 com­plaints up­held by the ser­vice each year where the ap­pro­pri­ate com­pen­sa­tion is above the cur­rent award limit.

If firms do not vol­un­teer to pay com­pen­sa­tion above the limit, com­plainants could be suf­fer­ing fi­nan­cial harm of around £113m per year.

Trea­sury com­mit­tee chair Nicky Mor­gan has crit­i­cised the han­dling of com­plaints

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