How Much Compensation Will I Get FOr Mis-Sold Pension​

The amount of compensation you may receive for a mis-sold pension in the UK varies significantly based on the severity of your financial loss, the size of your pension pot, and the entity handling your claim (the Financial Ombudsman Service or the Financial Services Compensation Scheme).

Here is a summary of the compensation limits, which depend on whether the firm responsible is still trading:

• If the Financial Advisor or Firm is still trading: Your claim will likely be handled by the firm first, and potentially escalated to the Financial Ombudsman Service (FOS). The FOS has set maximum compensation awards, which depend on when the poor advice occurred:
• • For complaints about acts or omissions by firms on or after 1 April 2019, the maximum award limit is £430,000 (for complaints referred on or after 1 April 2024).
  • For complaints about acts or omissions by firms before 1 April 2019, the maximum award limit is £195,000 (for complaints referred on or after 1 April 2024).
• If the Financial Advisor or Firm has gone out of business (ceased trading): Your claim will typically be handled by the Financial Services Compensation Scheme (FSCS). The FSCS has maximum payout caps per person, per firm, depending on when the firm failed:
• • If the firm failed after 1 April 2019, the maximum award is £85,000.
  • If the firm failed between 1 January 2010 and 31 March 2019, the maximum award is £50,000.

In general, claims consultants have secured compensation in the range of up to £50,000 of the pension nest egg. The average compensation amount claimed for pension mis-selling cases is approximately £25,000 for private pensions and £50,000 for final salary pensions. Claims focused on recovering capital losses, plus lost interest, and compensation for the mis-sale.

Understanding Mis-Sold Pensions in the UK

A mis-sold pension occurs when a pension transfer or investment was promoted with key details misrepresented, or when a financial advisor provided unsuitable advice or failed to disclose all necessary information, resulting in financial loss. Financial advisors have a crucial regulated duty to evaluate and communicate potential risks associated with pension transfers, and neglecting this duty constitutes negligent financial advice.

Key Signs You May Have Been Mis-Sold a Pension

Mis-sold pensions have significantly impacted thousands of individuals across the UK. You may have a legitimate claim if you experienced any of the following circumstances:

• Advice to Transfer from a Secure Scheme: You were encouraged to transfer out of a defined benefit/final salary scheme, even though your existing company scheme offered valuable benefits or would have yielded better results.
• Encouragement into a SIPP: You were advised to move your pension into a Self-Invested Personal Pension (SIPP), which may have exposed you to greater risk than you were prepared for.
• Unregulated or High-Risk Investments: You invested into non-standard assets such as overseas property, carbon credits, storage units, car park schemes, green energy projects, loan notes, or bio fuels.
• Risks Were Not Explained: The potential risks, losses, or complex terms and conditions associated with the new scheme or investment were not clearly or properly explained to you.
• Pressure or Rush to Decide: You felt pressured into the new pension without having time to shop around or look for a potentially better deal.
• Unclear Fees and Charges: Ongoing or one-off charges, management fees, or other costs were not clearly disclosed to you at the outset.
• Unsolicited Contact: You were contacted out of the blue (cold-called) and offered a free pension assessment. Note that unsolicited cold calling regarding pensions has been illegal in the UK since February 2019.

The Mis-Sold Pension Claim Process

If you suspect you have been a victim of mis-selling, acting quickly is essential, as strict time limits apply.

Time Limits to Be Aware Of

You generally have a standard time limit of six years from the date you were mis-sold the pension, or three years from the date you first became aware of the mis-sold pension or the issue.

Who to Claim Against

Claims are typically made against the financial advisor who provided the negligent advice or the financial firm they were working for at the time.

1. If the Firm is Still Trading: You must first file a complaint directly with the financial adviser or provider. They are required to acknowledge the complaint within four weeks and provide a final response within eight weeks. If you are unhappy with their final response or they fail to respond within eight weeks, you can escalate the case to the Financial Ombudsman Service (FOS).
2. If the Firm Has Gone Bust: If the company responsible is no longer in business, you can still make a claim through the Financial Services Compensation Scheme (FSCS), provided the firm was authorized by the Financial Conduct Authority (FCA) or Prudential Regulation Authority (PRA) when trading.

How Long Does the Claim Take?

The duration of a claim varies depending on its complexity and the route taken:

• If the firm admits liability, claims can often be concluded relatively quickly, possibly within 3–6 months.
• Claims handled by the FSCS typically take between 3 to 12 months.
• If a claim is escalated to the FOS, it may take up to 6 months or longer for an independent review and decision.

Costs of Making a Claim

You are not required to use a claims management company or solicitor to pursue your claim; it is possible to present the claim yourself directly and for free to the firm, the Financial Ombudsman Service (FOS), the Pensions Ombudsman, or the Financial Services Compensation Scheme (FSCS).

However, many clients choose to use a claims management company or solicitor who operate on a "No Win No Fee" basis, meaning there are zero upfront fees. If successful, a pre-agreed fee (a percentage of the compensation awarded) is deducted. The fees charged by regulated solicitors generally range from 15% to 30% plus VAT, depending on the compensation amount recovered.

Compensation Limits and Payout Structures

The compensation awarded for a mis-sold pension is designed to put you back into the financial position you would have been in had the mis-selling did not occur.

Financial Services Compensation Scheme (FSCS) Limits

The FSCS offers protection when FCA-regulated firms fail. The maximum compensation is per eligible person, per firm, and depends on the firm’s default date:

• Firm Declared in Default → Maximum Compensation Amount (Per Person, Per Firm)
• On or After 1 April 2019 → £85,000
• Between 1 January 2010 and 31 March 2019 → £50,000
• Before 1 January 2010 → Up to £48,000 (£30,000 fully covered, plus 90% of the next £20,000)

Financial Ombudsman Service (FOS) Limits

If the firm is still trading, the FOS can award compensation up to a higher limit, depending on when the poor advice took place:

• Date of Act or Omission (Poor Advice) → Maximum Compensation Award (Effective 1 April 2024)
• On or After 1 April 2019 → £430,000
• Before 1 April 2019 → £195,000

If your pension losses exceed the FSCS limit of £85,000, you may be able to seek additional compensation against any other regulated firm involved in the transaction.

Need help or want to learn more? Visit our Complaints Policy, GDPR Statement, or Contact Us page for more details.

FAQ'S

Q1: What is a mis-sold pension? A: A mis-sold pension occurs when a financial advisor gives unsuitable advice or fails to disclose key risks, leading you to transfer or invest your pension in a way that causes financial loss.

Q2: How do I know if I was mis-sold a pension? A: Common signs include being advised to leave a secure final salary scheme, invest in high-risk or unregulated assets, or transfer into a SIPP without understanding the risks.

Q3: What is the average compensation for a mis-sold pension? A: The average payout is around £25,000 for private pensions and £50,000 for final salary pensions, depending on the severity of the loss and the route of the claim.

Q4: What are the maximum compensation limits? A:

• On or after 1 April 2019 → up to £430,000 via the Financial Ombudsman Service
• Before 1 April 2019 → up to £195,000
• FSCS claims → capped at £85,000 if the firm has gone bust

Q5: Can I claim if I don’t have paperwork? A: Yes. Claims firms or solicitors can retrieve records from pension providers and regulators. Basic details like your name, provider, and approximate dates are often enough.

Q6: How far back can I claim? A: You can claim for pension transfers dating back to 1988, as long as you’re within 6 years of the mis-sale or 3 years from when you became aware of it.

Q7: How long does a claim take? A:

• FSCS claims: 3–12 months
• FOS claims: up to 6 months or longer
• Direct firm claims: often resolved in 3–6 months if liability is admitted

Q8: Do I need a solicitor or claims firm? A: No — you can claim directly via the FSCS or FOS for free. However, many choose regulated solicitors on a no win, no fee basis for ease and expertise.

Q9: What fees apply if I use a solicitor? A: Success fees typically range from 15% to 30% plus VAT, depending on the amount recovered and the firm’s terms.

Q10: Is there a deadline to claim? A: Yes. You must act within the statutory time limits. Also, the FCA’s redress scheme may have a final deadline (e.g., December 2025) for certain types of claims.