Do banks offer compensation in the first instance to avoid larger payouts from another process?

BigBoss

I won't go into too many details, but I've been embroiled in an incorrect data reporting issue with a bank and they've acknowledged complete responsibility and given me compensation. Since this involves giving away money, I suspect there's an ulterior motive i.e. paying me a small amount minimises the chance of them paying more down the line.

If my suspicion is correct, from whom are they afraid and how do I begin this process? 

Ebe_Scrooge

Without further details, how do you expect anyone to be able to offer constructive advice?

But in general, companies will sometimes offer a token amount of compensation by way of a goodwill gesture.  The only time it's worth (or morally correct) to fight for more is if you have suffered demonstrable and quantifiable financial loss as a direct result of the error, which is of higher value than the initial offer of compensation.

[Deleted User]

The bank will usually have bandings of money to give away based on severity of fault, a simple mistake might be £25-£100, a major one £300-£500. They will usually give money away to avoid you going to the FOS and them having to waste money on the additional fee and admin time to respond (though this doesn't give you any leverage, they would only pay more if the FOS ruled they should do).

If you have suffered a loss that you can prove and feel the offer is not sufficient to cover that, then you could either ask for more or refer the complaint to the FOS to argue your case but neither will guarantee you will get more money. Losses such as claiming you could have got a better rate on a loan for example are not "genuine" as in there is no way you could prove you would have got a better rate. However, having to take time off work to resolve an issue would be quantifiable.

It depends really what you feel your losses are, what you can prove and what you were offered. The compensation scheme is not a haggling process however.

Nebulous2

I made a complaint about a bank pre-covid, they didn't respond within the required timescale, and I went to the ombudsman. Once the ombudsman contacted them they quickly made me an offer. I can't remember exactly, but it was in the region of £300. 

The ombudsman recommended I accepted and said it was more than they would have awarded for the level of mistake. 


So it isn't all one way traffic. It's possible to get less than your initial offer. 

Sometimes it is better just to move on...... 

DullGreyGuy

BigBoss said:

I won't go into too many details, but I've been embroiled in an incorrect data reporting issue with a bank and they've acknowledged complete responsibility and given me compensation. Since this involves giving away money, I suspect there's an ulterior motive i.e. paying me a small amount minimises the chance of them paying more down the line.

If my suspicion is correct, from whom are they afraid and how do I begin this process? 

Banks can settle to avoid you going to the Financial Ombudsman (FOS) or court as both of these will incur them costs if they win or lose unless its a vey big matter (ie over £10k going to court).

Banks will also pay "shut up money" (also know as FOmoney) where you have no case at all but its just to get you to go away because you wont accept the situation. 

Both of these are commercial decisions however as if you get known to pay out £300 every time someone mentions FOS then that's a very slippery slope. Contrary to what you will read the FOS doesn't charge for every case referred to them, organisations get a number of free cases per year based on their size etc and only pay the c£450 on anything above that number.

Flat_Earther

Deleted_User said:

The bank will usually have bandings of money to give away based on severity of fault, a simple mistake might be £25-£100, a major one £300-£500. They will usually give money away to avoid you going to the FOS and them having to waste money on the additional fee and admin time to respond (though this doesn't give you any leverage, they would only pay more if the FOS ruled they should do).

If you have suffered a loss that you can prove and feel the offer is not sufficient to cover that, then you could either ask for more or refer the complaint to the FOS to argue your case but neither will guarantee you will get more money. Losses such as claiming you could have got a better rate on a loan for example are not "genuine" as in there is no way you could prove you would have got a better rate. However, having to take time off work to resolve an issue would be quantifiable.

It depends really what you feel your losses are, what you can prove and what you were offered. The compensation scheme is not a haggling process however.

Not true.

There was one point where this was true, perhaps 15 or so years ago but most banks have now realised how pointless this approach was (it just encouraged people to threaten FOS intervention to get more money) and thankfully will now call people's bluff.

Most offers are incredibly generous under the circumstances, and customers should bite their hands off.

[Deleted User]

DullGreyGuy said:

BigBoss said:

I won't go into too many details, but I've been embroiled in an incorrect data reporting issue with a bank and they've acknowledged complete responsibility and given me compensation. Since this involves giving away money, I suspect there's an ulterior motive i.e. paying me a small amount minimises the chance of them paying more down the line.

If my suspicion is correct, from whom are they afraid and how do I begin this process? 

Banks can settle to avoid you going to the Financial Ombudsman (FOS) or court as both of these will incur them costs if they win or lose unless its a vey big matter (ie over £10k going to court).

Banks will also pay "shut up money" (also know as FOmoney) where you have no case at all but its just to get you to go away because you wont accept the situation. 

Both of these are commercial decisions however as if you get known to pay out £300 every time someone mentions FOS then that's a very slippery slope. Contrary to what you will read the FOS doesn't charge for every case referred to them, organisations get a number of free cases per year based on their size etc and only pay the c£450 on anything above that number.

Banks only get a small number of FOS cases free - the FOS only gives 3 free (down from 25) to anyone not in the group-account fee arrangement and 15 (down from 50) for those who are in