FOS, FSCS and court routes for mis-sold pension claims

The Financial Ombudsman Service (FOS), Financial Services Compensation Scheme (FSCS) and court routes for pursuing mis-sold pension claims are discussed in the latest blog post from our Professional Negligence team.

If you or a loved one have been negligently advised to transfer your pension and believe you may have suffered financially as a result of the negligent advice received, you may be entitled to claim compensation for the financial loss suffered.

The different routes to claim for a mis-sold pension

There are different routes by which a mis sold pension claim can be pursued.

The most appropriate route for you will depend on various factors, such as who you are claiming against, if the advisor or firm is still trading, whether they were regulated and how much financial compensation you are seeking to recover.

The below initial factors need to be considered to help you establish which route to take:

A. Firstly, you would need to establish who your claim would be against. Generally, the advisor should be identifiable from any paperwork you retained at the time of the advice or by making a request for documentation from your current or former pension scheme provider.

B. Once the advisor has been identified, you would need to check if the advisor or the firm who provided you with the negligent pension advice were authorised to provide the investment advice. This can be checked by searching the FCA register, which can be found by clicking here.

C. You would also need to check if the advisor’s firm (or their Principal firm) are still in existence. This can be checked by searching the Companies House register, which can be found by clicking here.

Identifying the advisor and establishing if you received negligent advice is not always an easy task.
At Jordans Solicitors, our highly experienced team can guide you through the step-by-step process to help you recover the compensation you may be entitled to.

Once you have established who the advisor was, their authorisation and company status, and if their advice was negligent, your claim can be progressed using one or more of the following three routes:

1. The Financial Ombudsman Service (‘FOS’)

2. The Financial Services Compensation Scheme (‘FSCS’)

3. The Courts via a civil claim

1. The Financial Ombudsman Service (‘FOS’)

FOS is an independent public body that resolves disputes between consumers and businesses that provide financial services.

This route is utilised when the pension advisor who gave the negligent advice is still authorised by the FCA, or the advisor’s Principal company is still authorised by the FCA. If they are no longer authorised, FOS will still consider a complaint if the firm is still in existence and has not entered liquidation.

Before directing your complaint to FOS, you must put your complaint in writing to the advisor or Principal concerned. If the advisor or Principal denies liability for your mis-sold pension claim, the matter can be referred to FOS to consider.

The advisor or Principal’s final response should explain your right to refer the matter to FOS within 6 months from the date of the advisor or Principal’s letter denying liability.

Claims submitted to FOS after the 6-month deadline could be time barred unless:

– The delay is due to exceptional circumstances (FOS will expect to see evidence to prove that the circumstances which resulted in the delay were exceptional e.g., illness).

– The advisor or Principal did not send a valid final response.

– The advisor or Principal consent to waive the 6-month time limit.

In addition to the above, FOS also apply further strict time limits.

You would need to make your complaint to the advisor or Principal within 6 years from the date you received the negligent advice, or if you are outside the 6-year period, within 3 years from the date you become aware that you had cause to complain.

In civil court claims, a ‘15-year long stop’ rule applies for negligence claims, i.e. if your claim has been brought after 15 years from the negligent advice, your claim would be deemed out of time by the courts, however, the ’15-year long stop’ rule does not apply to claims submitted to FOS.

Once the matter is referred to FOS they will consider if you were negligently advised and if you have suffered a loss and if so, they will ask the business/advisor to put things right.

Different compensation limits apply depending on when you bring your claim to FOS:

– £355,000 for complaints referred to FOS on or after 1 April 2020 about acts or omissions by firms on or after 1 April 2019;

– £350,000 for complaints referred to FOS between 1 April 2019 and 31 March 2020 about acts or omissions by firms on or after 1 April 2019.

– £160,000 for complaints about acts or omissions by firms before 1 April 2019, and which are referred to FOS after that date.

– £150,000 for any complaints referred to FOS before 1 April 2019.

2. The Financial Services Compensation Scheme (‘FSCS’)

The FSCS is a government backed scheme that will consider claims against advisors and Principals who are no longer around (i.e. if the firm no longer exists or has gone into liquidation).

The FCSC is therefore able to compensate you as ‘a last resort’ if nobody else is around to pay out for your loss.

If the advisor or principal was never regulated, the FSCS will not consider the complaint.

Similar to FOS, the FSCS also apply strict time limits.

You would need to have made your complaint the FSCS within 6 years from the date you received the negligent advice, or if you are outside the 6-year period, within 3 years of you becoming aware that you had cause to complain.

In contrast to FOS and in accordance with the Limitation Act applied in civil court claims, a ‘15-year long stop’ rule will apply, i.e. if your claim has been brought after 15 years from the negligent advice, your claim would likely be deemed out of time by the FSCS, although exceptional circumstances may be considered.

If the FSCS decide you have suffered a financial loss as a result of the negligent advice you received, they will pay you compensation but only up to a certain limit as set out below:

If the firm failed after 1 April 2019

If you received negligent advice in relation to your pension, you could be eligible for a compensation claim of up to £85,000 per eligible person, per firm.

If the firm failed between 1 January 2010 – 31 March 2019

If you received negligent advice in relation to your pension, you could be eligible for a compensation claim of up to £50,000 per eligible person, per firm.

3. The Courts via a civil claim

If the advisor (or their Principal) who provided you with the negligent pension advice was never regulated or your loss is greater than the compensation limits payable by FOS or the FSCS, a civil claim can be pursued through the Courts.

In civil Court claims, strict time limits apply.

You would need to issue your claim at Court within 6 years from the date you received the negligent advice, or if you are outside the 6-year period, within 3 years from the date you becoming aware that you had cause to complain.

Similar to the FSCS and in accordance with the Limitation Act, a ‘15-year long stop’ rule will apply, i.e. if your claim has been brought after 15 years from the negligent advice, your claim would be deemed out of time by the Courts and without exception.

If you are seeking to pursue a professional negligence clam, the pre-action protocol for professional negligence needs to be followed. This can be found at: https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/prot_neg

Court procedures can be complex and expensive to pursue, so it is important to seek legal advice when deciding if this is the most appropriate route for you. At Jordans Solicitors we can offer you expert legal advice and assist you in selecting the best route.