Complain and get your share of £204 million

If you've been ripped off by a financial firm, don't stand for it. Follow these tips and get compensation.

Not that long ago, the idea that I would complain to a company was completely alien to me.

It may have been laziness, or perhaps my very British attitude of not wanting to cause a fuss, but whenever I was let down by a company, whether it was poor food in a restaurant, or waiting ages for an order to be delivered, I let it slide. No complaining from me.

Then, probably about a year ago, something in me changed. I just wasn’t going to take it anymore. My friends actually began to mock me for my persistent complaint letter writing.

Burton bore the brunt of it. I complained about their shoddy treatment of my wife and I when we were on the hunt for wedding suits, and then again when they put some clothes I had ordered in our recycling bin rather than leaving them with a neighbour (I should have learnt after the first time, clearly). However, Burton were far from alone.

Maybe it was a sign of getting older, or maybe I had just got sick of putting up with substandard treatment. The fact is many of us are only too happy to just accept it if we are treated poorly by firms that are only too happy to part us from our cash.

However, complaining properly when you have been truly mistreated can lead to substantial compensation payments.

The FSCS

The Financial Services Compensation Scheme is a compensation fund set up to pay out redress in instances where the relevant financial firm is unable, or likely to be unable, to pay out adequate compensation.

The body covers deposits, insurance policies, insurance broking, investment business and home finance (things like mortgage advice and arrangement).

However, there are limits on just how much it can protect or pay out. With deposits, investments and home finance, 100% of the first £50,000 is covered. With general insurance advice and arranging, and insurance business, you can be paid up to 90% of the claim (though there is no upper limit on the size of the claim itself).

And over the course of 2009/10, the fund paid out a whopping £204 million in compensation. So what are people complaining about - and how do you go about doing it yourself?

Payment Protection Insurance

It will come as no surprise to many readers that one of the biggest problems the FSCS found itself dealing with last year was Payment Protection Insurance.

This form of insurance sounds great on the surface - protection, sold alongside credit arrangements like credit cards, loans and mortgages, which will cover your payments for a specified period should you be unable to work due to an accident, sickness or unemployment

Sadly, too often the policies are mis-sold, leaving customers short of cover they thought they were entitled too, while the profit margins involved are staggering. It has long been a shameful banking rip-off.

It is also keeping the FSCS busy - it accounted for more than 2,400 claims the fund dealt with last year, a substantial increase on the previous year, with further increases expected next year.

It is perhaps telling that a whopping 89% of claims related to PPI resulted in the offer of compensation. What’s more, the average compensation figure was a hefty £8,540.

Investments

However, by a distance the biggest area the FSCS had to deal with last year regarded investments. Of the 31,592 claims it received in 09/10, an incredible 24,000 of them fell within the sub-section of investment intermediation.

These were mostly due to a number of large firms providing structured products falling into default. Again, there was a very high level of claims being paid out, at 90%, and once again the sums involved were far from negligible, with the average payout a whopping £10,799.

However, the FSCS dealt with complaints on all sorts of areas, besides PPI and investments. So how does the complaints process work?

How do you go about complaining?

If you think you are entitled to compensation, you should first try to contact the firm in question to sort out your claim directly.

If the firm is not in a position to pay out your claim, you can then turn to the FSCS. Making a claim is absolutely free. You submit your claim, and the FSCS will then investigate the firm in question, to discover whether they are able to pay for your claim. If they are unable to pay, they will be declared as being in default.

You will then be invited to submit an application for your claim, which will then be reviewed, and you will be informed in writing whether you have been successful or not.

Faster payouts

What’s more, the FSCS has pledged to improve the service it provides still further. It has worked closely with the Tripartite Authorities - the FSA, the Bank of England and the Treasury - in order to improve its ability to compensate customers quickly, across a wide range of claims.

As a result, from January 2011, it will be in a position to make payouts for deposit-taking failures within a week.

Your other options

Of course, as useful as the FSCS is, it will always be a last resort. Many times we will want to complain about firms that are only too capable of paying out compensation.

Who you should take up your complaint with depends on the sort of firm involved. With financial firms, the Financial Ombudsman Service should be your first port of call (you might like to have a read of How to complain and fight for your rights).

It pays to do a bit of background on the firm involved and any regulatory bodies they may belong to, who should be able to point you in the right direction of how to get your complaints heard. Alternatively, you can always go the traditional route and write to the bosses of the company itself - Anna Powell tried it, and got £180 as a result!

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