Posted by Nicola Radcliffe, Senior Associate
How to make the most of your mis-selling claim
If you discover that you or your business has been mis-sold a financial product, such as a loan, mortgage or investment, you could have a claim against the bank or financial adviser if the mis-sold product results in financial loss being suffered.
If a complaint to the bank is not resolved to your satisfaction, individuals and SMEs are able to escalate their complaint to the Financial Ombudsman Service (FOS), which can force the bank to repay you up to £150,000, and can recommend that more is paid if the losses suffered exceed that threshold.
No second bite at the cherry
A complaint to the FOS or a claim in court must be started within the legal time limit, which is usually 6 years from the date that the product was sold or 3 years from discovery that something was wrong. Failure to do so would result in your claim being time-barred and any remedy being lost.
It is now well established in law that if you make a complaint to the FOS and accept the award that the FOS orders the bank to pay, you cannot then have a ‘second bite at the cherry’ by issuing a negligence claim in court against the bank for more money if your losses haven’t been recovered in full – see my previous blog on the subject here.
However, if your FOS complaint is unsuccessful you can still go ahead with a claim in court but only if you start your court claim in time. Therefore if your FOS complaint was started before the time limit expired but is not decided until after the deadline has passed, the claim will still be time-barred. Waiting for a decision from the FOS does not stop the deadline from ticking away.
Protecting your claim
The High Court has recently considered a situation where claimants were short on time and had started court proceedings to protect their claim. They then applied for the claim to be stayed so that they could pursue their complaint through the FOS which would be quicker and cheaper than continuing with the litigation. The bank refused to agree to a stay, arguing that a delay in the proceedings would prejudice their staff and that there should be a speedy resolution to the claim.
There are no fees payable to the FOS for handling your complaint and decisions can be given within a few months of the complaint being made. In court, parties can incur substantial fees and can sometimes wait years for a matter to reach trial.
The court agreed that the claimants had done the right thing and agreed to grant the stay, on the basis that it was not unlike agreeing to stay proceedings so that mediation can take place, which has the chance of bringing the claim to an end more quickly and economically, which is always encouraged by the courts. The claimants acknowledged that they would not be entitled to another go at their claim if they won before the FOS, but it was also universally acknowledged that if they lost, they would be entitled to come back to continue their litigation before the court.
If you believe that you or your business has been mis-sold a financial product it’s important to act quickly to avoid the risk of your claim being time-barred. Keep all paperwork and correspondence relevant to the complaint as the FOS or the court will need to see it as evidence.
If there is an issue about limitation or you are concerned that your claim could run out of time, take advice. The recent decision means that you could protect your claim by starting proceedings in court but then seeking a stay in order to pursue the complaint through the FOS.
We have experience of dealing with significant investment losses arising from banks and financial adviser negligence, including failing to advise on appropriate investments or advising inexperienced investors to invest in unsuitable high-risk investments. If you think you might have a claim contact us today.
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