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Financial compensation calculations

Financial Ombudsman Service awards

Where the Financial Ombudsman Service (the “service”) upholds your financial complaint, the service may rely on the respondent (the technical term for the adviser who has to pay you compensation) to calculate the amount of compensation that must be offered to you – based on the details prescribed by the service.  When this applies, the respondent must explain to you, in a straightforward way, how they calculated the amount.

Sometimes the explanation provided to you is complex and may rely on measures such as investment return indices or capitalised values of future income allowing for inflation and mortality rates with which you are not familiar – this is the case for many pension complaints.  If you have taken some benefits already the calculation of the appropriate offset may be complex.  Sometimes the amounts may be very large, and you may want to be sure that the calculations made by the respondent are correct or if, as is sometimes the case, necessarily based on assumptions, are reasonable.

In some cases, there is an issue of how compensation should be paid – for example into a pension fund or investment fund rather than as a payment into your bank account.  There may be issues of adjusting the compensation to allow for taxation or there may be transaction costs which might (or might not) need to be added to the compensation.

The Financial Ombudsman Service will usually not help you with any of this (but you can ask them).  Usually, you will be given a fixed period to state whether you accept an offer or not.  Obviously, you should wait until you are satisfied with the amount offered and the proposed method of payment.  If you need more time, you should ask the Financial Ombudsman Service for an extension (but do this well before the deadline that you have been given) – we understand that they are usually sympathetic to such requests

Congruent offers a paid-for professional service to provide you with assistance if you need it.  There are potentially two stages.  The first stage is to check the amount you have been offered and to give you a brief report in this respect.  You will need to provide us with all the applicable details of your complaint, what the Financial Ombudsman Service has said when upholding your complaint, and the details of the offer made to you.  The second stage can be for us to make representations on your behalf to the Financial Ombudsman Service.  The service described in this note would be limited to representations regarding the specification of how compensation is to be calculated rather than on the merits of the complaint.  This is because the Financial Ombudsman Service can rely on what you have said on the merits of your complaint – Congruent only needs to add to that if there are issues concerning the calculation of compensation that our analysis indicates are significant and ought to be considered further by the service.

Congruent’s second stage service may also, if required, extend to representing you in negotiating the amount and/or basis of payment of compensation with the respondent.

The services that Congruent has described here, first stage and second stage, are regulated services.  They can only be provided on a commercial basis by lawyers or by businesses that are authorised under the Financial Services and Markets Act 2000 and are regulated by the Financial Conduct Authority.  Congruent is authorised and regulated.  If you require our service, please contact us with the details.  We may need to have a telephone conversation with you (or we use Microsoft Teams).  We will then issue an Invitation Letter that sets out a statement of the work we will carry out and our charges and the terms and conditions that meet the regulatory requirements.

Congruent Calculations

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General Terms and Conditions