If you believe you have been mis-sold an investment, you will have the right to complain about the advice that you were given. However, it is important to note that there is a time limit that applies to compensation claims which is known as the 6-year rule. This means that a time limit can be applied for any advice you received over 6 years ago and when this happens, you will not be eligible to claim compensation.
This rule is actually misunderstood. The bottom line is that you will be able to claim compensation regardless of when the investment was sold to you. Investment firms and banks will only be able to apply the time limit in certain situations. You will still be able to make a complaint if you were mis-sold an investment over 6 years ago. There have been cases where people have claimed compensation for investments sold over 10 years ago.
This is also the case when dealing with a second and less known time limit. This time limit states that you should complain about the mis-sold investment within 3 years of becoming aware of the problem. Banks will often start the clock on this time limit when you surrender your investment. However, you may not realise that there is a problem until much later. In these cases, you will still be able to make a complaint.
The rule might or might not affect your investment and situation. Your eligibility for compensation will depend more on the circumstances surrounding the sale of the investment. However, there is still some information that you need to know about the time limits.
The Regulations And Your Claim
There are laws and regulations which have been laid down by the Financial Conduct Authority or FCA. There are also rules from the Financial Ombudsman Service or FOS which govern the compensation claims process.
You will be able to make a complaint to a financial institution at any time, regardless of when you invested your money. The application of the time limits will be the bank’s decision and if they do they will respond to your complaint by stating that it falls outside of the relevant timescales. However, even when this happens, the case can still be referred to the FOS for times when there are exceptional circumstances which had prevented you from making a claim earlier.
The 6-year rule will generally come into play when you refer your complaint to the FOS which has an obligation to set limits on when a complaint can be made. While this is true, you should keep in mind that they may not reject your complaint outright if you did not act in time. They will need permission from the bank or investment firm in question before they continue looking into the matter.
Regardless of the regulations that are in place, each case will be judged on its own merits. This is based on the fact that good advice for one customer could be unsuitable for another. It is essential that financial advisors follow correct procedures when providing advice and they evaluate your financial and personal situation. The bank or investment firm will need to show that this was done when a complaint is made.
According to the FCA, they do not consider it is in the best interests of the consumer to rule out complaints which have been made outside of the 15-year limit that applies to court cases. The FSCS or Financial Services Compensation Scheme also states that the time-barring by banks can be disregarded when they find it appropriate to do so. They also state that each claim will be assessed on an individual basis.