In the UK banks in trouble were bailed out with money from the government – your money as a taxpayer – and little has come back as a return on that investment.
So how to define financial mis-selling?
There are many ways financial services could have been and have been mis-sold to you, so here some examples of what you should be aware of and what you can do if you have been, or believe that you have been, affected.
What is financial mis-selling
Put simply; it isn’t always simple. Mis-selling means, you were given advice that was unsuitable, or there was no proper explanation of the risks involved. It also relates to the information you needed but were not given so that you ended up with a financial product that wasn’t right for you.
When someone advises you to buy a particular product they must recommend something that is suitable for your needs. They also have to explain clearly what the product can and cannot do and ensure you are aware of any risks. If they don’t do any of those things, you could be able to claim for compensation because a financial product has been mis-sold to you.
You don’t have to have lost money to make a complaint about financial mis-selling. It’s a question of if the product was right for you and your circumstances that are important. As an example, you may have been sold an investment opportunity that had a higher risk factor than you would have been happy with; that would give you grounds for complaint.
Some investments are inherently risky, and if they perform badly, you could lose money. It’s all part of the gamble you take and is an accepted part of how the financial world operates. However, if you were not told about the risks, you could make a complaint of mis-selling.
There are three main areas where people may have been mis-sold financial products, so it’s worth checking to see if any of these categories apply to your situation.
Payment protection insurance (PPI)
PPI was generally sold with products that required you to make repayments. The insurance policy was drawn up so it would cover your repayments in circumstances such as redundancy, or if you are unable to work because of an accident, the result being that you were unable to keep up the repayments.
It was discovered that thousands of policies had been mis-sold and many individuals have now been compensated for that mis-selling, but there are many others, and you may be one, who don’t know if they had PPI in the first place. If you find you had, and it was mis-sold to you, you could claim compensation.
There are many types of loan where PPI may have been sold to you as part of a package, including credit cards, mortgages, personal or business loans, car finance or other items bought on credit. Remember, not all PPI products were mis-sold, but it has proved to be a major headache for financial providers who have had to pay back a lot of money to their customers.
Some common ways you may have been sold PPI include being pressured into buying the insurance; not being informed about policy exclusions, being retired or unemployed when PPI was sold to you, not having the full terms and conditions explained to you and you were told the insurance was compulsory, leading you to believe you wouldn’t get the financial product you wanted without taking out a policy.
If you had or have a credit card, it’s a good idea to check if you had Barclaycard PPI or any similar policy that covered other products. You don’t still have to have that product – you may, for example – have paid off a loan or hire purchase deal – but you are still entitled to check if you had a policy and whether or not it had been sold to you properly.
If you are concerned about the status of any PPI, you had, or may still have; you can contact the provider of the particular product covered and register a complaint.
A mortgage is probably the biggest loan you will take out during your life and though the majority are unlikely to have been mis-sold there is always the possibility that yours could have been.
There are several ways your mortgage could have been mis-sold to you. These include not being informed about how much commission your mortgage adviser would receive from the company lending the money; the end date of your mortgage was after the date of your retirement; advice was given to switch lenders without you being told about the penalties and fees; an endowment policy was set up without the risks of the investment being explained clearly to you.
If you think you may have been affected check all your documentation and get in touch with your lender or advisor to see if there are any problems that need addressing.
As mentioned previously, investments can go down as well as up; it’s a risk you take. However, if you hadn’t had the risk involved explained to you, or you weren’t told what type of investments were going to be made on your behalf then you may have been a victim of mis-selling. That could also be the case if your advisor went ahead with investments that didn’t suit your attitude to risk or your particular needs.
You can make a complaint to your advisor or provider if you think you were mis-sold an investment.
Gather your information
If you suspect you may have been mis-sold any financial product pull together as much information as you can before complaining. It will make things easier for you and help with turning around an answer more quickly for the organization you are contacting.