Compensation for distress and inconvenience

If a bank, insurer, lender or pension provider has handled your complaint badly, the Financial Ombudsman Service can tell it to pay you compensation for the distress and inconvenience it caused. That sits on top of anything it is told to do to put your money right. The ombudsman's own guidance says: "We may also tell them to pay you compensation for any distress or inconvenience you have suffered."¹

The amounts are usually modest. The ombudsman's published guidance for some complaint types shows distress and inconvenience awards of up to £300, and up to £1,500 in others². Its older casework generally awarded between £150 and £500 for distress or inconvenience⁴. Individual decisions in its case studies include £150, £200, £300 and £500⁵.

There is no fixed tariff. The ombudsman looks at what the business did wrong, how long it went on and how much it affected you, and decides what is fair. It says there needs to be more than just a minor inconvenience or upset⁹. This page sets out what the awards look like, what they are paid for, and how to ask for one.

How much the ombudsman awards: typical amounts from £150 to £1,500

The Financial Ombudsman Service does not publish a single scale for distress payments. What it publishes is guidance for particular kinds of complaint, and the figures vary widely by subject.

For some complaint types the published figure is up to £300 for distress and inconvenience². For others it is up to £1,500¹³. These are the outer limits the ombudsman sets for those categories, not what a typical complaint receives.

Its own historical casework gives a better sense of the middle. In 2008/09 the service reported "generally awarding an amount between £150 and £500" for distress or inconvenience⁴. In 2015/16 it paid an average of £200 in compensation recognising the non-financial impact of avoidable delays or administrative mistakes¹⁴.

Individual decisions in its published case studies cluster in the same band:

Older decisions show the same pattern. In a 2009 case the firm offered a couple £50 for the inconvenience caused¹⁸, and in a 2010 case the ombudsman told a bank to pay £150 to reflect the distress and inconvenience it had caused¹⁹. In a 2003 case the award was £200 for distress²⁰.

The Pensions Ombudsman works differently. It may make an award if poor administration caused "significant" distress and inconvenience as defined in its guidance¹⁰, and it says: "We can also make an award for any distress and inconvenience you may have suffered."²¹ In one case it ordered a respondent to pay £500 for the significant distress and inconvenience caused²².

Examples of awards in real complaints

The ombudsman's case studies show what actually triggers a distress payment, and how the amount moves.

In one, a bank failed to cancel a direct debit. It apologised and offered £50 for the inconvenience. The ombudsman told it to pay £150 instead⁶. In another, a customer complained about account transfer delays that caused a £30,000 loss. The ombudsman asked the bank to pay £300, rather than £150, for the distress and inconvenience it caused¹⁷. In a third, a bank offered £200 to a customer over a power of attorney and login problem⁷.

Insurance complaints follow the same shape. An insurer took four months to settle a medical insurance claim, and the ombudsman said it should pay £150 for the distress caused⁸. A contents insurance complaint about subsidence and ground movement produced a distress and inconvenience figure of up to £300³. A complaint about an insurer taking too long to repair leak damage in a kitchen led to an award of £8,000 overall, which the ombudsman described as reflecting "the extreme level of impact caused to both policy holders over many years"²³.

The ombudsman's power here is general. It says: "We might also ask them to make an award for any distress and inconvenience caused."²⁴ That applies across banking, insurance, investments, mortgages and pensions. In one case involving a lender that did not explain an early repayment charge, the ombudsman told the lender to pay compensation for the distress and inconvenience the customer had experienced²⁶.

Two things stand out from the casework. First, the amount tracks the impact, not the size of the underlying loss: a £30,000 loss produced a £300 distress award, and a long-running repair saga produced a much larger overall award. Second, the ombudsman will raise a firm's own offer. The £50 to £150 and £150 to £300 movements in the cases above are the ombudsman correcting what it saw as too little.

Is compensation for distress paid on top of putting right my financial loss?

Yes. The two are separate, and the ombudsman's guidance is explicit: "We'll tell them to compensate you for any financial loss, as well as for distress and inconvenience."¹¹ The same wording appears across its complaint pages, including for ISAs, lifetime ISAs, personal pensions and additional contribution schemes²⁷.

The financial loss part restores what you are out of pocket: a refund, a corrected balance, interest, a charge removed. The distress part recognises the trouble the mistake caused you. A firm can also be told to pay costs. Which? summarises the ombudsman's powers this way: in addition to telling the financial business to pay compensation for financial loss or to put something right, it can order costs and compensation for distress or inconvenience³⁰.

The ombudsman decides whether to make a distress award at all. Its guidance says it will "consider whether you've experienced any distress or inconvenience as a result of what the business did wrong and whether we think it's appropriate to award compensation"³¹. So a complaint can succeed on the money and still produce no separate distress payment if the ombudsman does not think one is warranted.

Where a mistake by the business caused a loss, the ombudsman's standard approach is to tell it to compensate for the financial loss as well as for distress and inconvenience³². For personal accident insurance it says it may tell the insurer to put things right and may pay compensation for distress or inconvenience³³. For mortgage shortfalls it says it might tell the lender to pay compensation for any distress or inconvenience they have caused³⁴. For private medical insurance it says it might make an award for inconvenience and loss of comfort where you had treatment on the NHS³⁵.

The practical point: when you complain, set out both. Say what the mistake cost you in money, and say separately what it put you through. They are assessed as two different things.

What the ombudsman can award for

The Financial Ombudsman Service lists the impacts it can award compensation for. Its guidance says it can award compensation if you have experienced any of the following: unnecessary distress; inconvenience or loss of your time; pain or suffering; damage to your reputation⁹.

That list matters because it is wider than most people assume. Loss of your time is named. So is damage to your reputation. Neither requires a financial loss to sit behind it.

There is a threshold. The same guidance says: "There needs to be more than just a minor inconvenience or upset."⁹ So a single delayed letter is unlikely to produce an award, while a mistake that dragged on, was repeated, or left you chasing for months is more likely to.

There is also a limit on who can receive it. A limited company can be awarded compensation for inconvenience, but not for distress or upset, because, as the guidance puts it, "the company itself can't be 'distressed' or 'upset' so we wouldn't award compensation for this"⁹. Any payment goes to the company itself, not to its shareholders or directors personally⁹. If you run a business and complain about how it was treated, that distinction decides what you can ask for.

The ombudsman's wider powers sit under the statutory scheme. A money award may compensate for financial loss or any other loss, or any damage, of a specified kind, and it may not exceed the monetary limit, though the ombudsman may recommend that the respondent pay the balance above it³⁶. The maximum money award is £150,000, or £100,000 for complaints received before 1 January 2012¹². Independent guidance from Which? puts the figure at £445,000 or more, increasing each year with inflation³⁷; the ombudsman's own current limit is £455,000 for complaints referred on or after 1 April 2026³⁸. The figures differ because the statutory limit, the ombudsman's own published summary and independent guidance have been updated at different times.

Asking for compensation for distress in your complaint

You do not need a special form or a legal argument. The ombudsman considers distress and inconvenience as part of the complaint it is already deciding, and it can award it whether or not you used the words.

What helps is setting it out plainly. Describe what the business did wrong, how long it went on, what you had to do to chase it, and how it affected you. The ombudsman's list of awardable impacts gives you the categories to cover: distress, inconvenience or loss of your time, pain or suffering, damage to your reputation⁹. If your complaint is about a pension, the Pensions Ombudsman can also make an award for distress and inconvenience²¹.

Complaining is free. The ombudsman says of PPI: "It's easy and free to complain about PPI - for example, if you think you were mis-sold it."³⁹ The same applies across its jurisdiction. In regular-premium PPI mis-selling cases, it says that in some cases it may decide to tell the business to pay compensation for any distress or inconvenience caused to the consumer⁴⁰.

If you were misled or pressured into buying something, Citizens Advice notes you might also be able to get compensation for distress or inconvenience⁴¹. For insurance complaints generally, Which? sets out how to complain to your insurer and escalate to the ombudsman³⁰. If your complaint is about a mortgage broker's conduct, there is a separate route through the broker's own complaints process and then the ombudsman⁴².

Where the protection stops

A distress award is discretionary. The ombudsman decides whether to make one and how much, based on the impact and what it considers fair. There is no entitlement to a set sum, and no scale you can point to and demand.

The threshold excludes minor matters. "There needs to be more than just a minor inconvenience or upset."⁹ A complaint that succeeds on the money can still produce nothing extra for distress.

Companies cannot receive distress or upset awards, only inconvenience awards, and only the company itself can be paid⁹. If you are complaining on behalf of a business, that caps what is available.

The total award is capped. The maximum money award is £150,000, or £100,000 for complaints received before 1 January 2012¹². Independent guidance puts the figure at £445,000 or more, increasing each year with inflation³⁷; the ombudsman's own current limit is £455,000 for complaints referred on or after 1 April 2026³⁸. Where the ombudsman considers fair compensation requires more than the limit, it may recommend the respondent pay the balance, but a recommendation is not an order³⁶.

And the costs rules cut both ways: an award can be made against a complainant whose conduct was improper or unreasonable, or who caused an unreasonable delay³⁶.

If you need free, impartial help understanding your options before or during a complaint, MoneyHelper and the ombudsman's own consumer pages set out the process, and debt advice charities can help where a complaint sits alongside problem debt.