Court and legal claims: when a financial case goes beyond the FSCS or the Ombudsman
When a case goes beyond the FSCS or the Ombudsman
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Most financial claims are settled without ever going near a courtroom, through the FSCS if the firm has failed or the Financial Ombudsman if it is still trading. Those routes are free and far quicker. But some cases do need the courts: where the loss is larger than the Ombudsman can award, where the Ombudsman has rejected a complaint you believe is sound, or where the wrongdoing, such as hidden commission or fraud, calls for a formal legal claim.
Court action can recover more, but it is more involved and it carries cost and risk. This page explains when it is the right route and what to weigh up first. For the deeper read, see our guide, going to court with a claim if your complaint is rejected.
- If the firm has failed, start with FSCS compensation (free).
- If it is still trading, complain to the firm and then the Financial Ombudsman (free) first.
- Check whether we have already reported on the firm in our claims by company directory.
Court is usually the step you take when those routes are exhausted or do not fit.
The kinds of claim that go to court
A court claim is built on a legal ground. The most common in financial cases are:
- Professional negligence, where a regulated adviser breached their duty of care and it cost you.
- Undisclosed or secret commission, where you were not told what a firm was really being paid.
- Breach of contract and fraud or misrepresentation.
Individuals can also bring a claim for a breach of FCA rules under section 138D of the Financial Services and Markets Act, for example where advice was unsuitable.
How a court claim works
Court action can recover more, but it is more involved and it carries cost and risk.
Exhaust the free routes
Complaint to the firm and, where it fits, the Ombudsman or the FSCS.
Check the merits and time limits
Usually six years, though hidden facts like concealed commission can extend the clock.
Build the evidence
Paperwork, the loss calculation and, where needed, expert input, then a formal letter of claim.
Issue proceedings
Most claims settle after this stage rather than at a trial.
Judgment or settlement
The court can award more than the Ombudsman, particularly on large or complex losses.
What to watch out for
Cost and risk are real.
Court is not free like the Ombudsman, and if a claim fails there can be costs consequences. It has to be worth it, which is exactly the sort of thing we assess honestly before anyone commits.
Time limits are strict.
The general rule is six years, but there are important extensions where facts were concealed or you only later became aware something was wrong. Do not assume you are out of time, and do not assume you have forever.
Choose your representative carefully.
A number of claims firms and law firms have run into funding trouble or gone into administration mid-case. Look for a stable, properly funded representative, and read our note on what happens when a claims firm fails.
The Ombudsman route still has weight.
Ombudsman decisions carry real force, as the courts confirmed when the Court of Appeal upheld the FOS ruling in the Carey (Options) SIPP case. Court is not automatically the stronger option.
Frequently asked questions
For most people the Ombudsman is the sensible first step: it is free, quicker, and its decisions carry weight. Court tends to make sense for larger or complex claims, or when the Ombudsman has not resolved things. We help you choose.
Usually six years from the advice or sale, but the clock can start later where key facts, such as hidden commission, were deliberately concealed. Get an early view so a deadline does not pass unnoticed.
The courts can award higher sums, particularly where substantial pension or investment losses, secret commissions or fraud are involved.
Not sure which route is yours?
Higher awards, but cost and risk apply
Talk to us about your options
If you are weighing up court action, or the Ombudsman has said no and you think it is wrong, have a free, no obligation conversation with us. We will give you a straight view of the route with the best chance and the least risk. Call 0800 041 8359 or make an enquiry.
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