The FSA has today published it’s much anticipated report on the interest rate swap redress scheme.
The report confirms the FSA’s initial findings that there was significant mis-selling of interest rate hedging products. On a review of 173 sales to ‘non-sophisticated’ customers from across four banks it was found 90% of the sales did not comply with one or more of the regulatory requirements.
The FSA has recommended that banks independently review cases where interest rate swap agreements were sold to customers and provide redress where appropriate. If smaller companies are not satisfied with the results of the review, they can complain to the Financial Ombudsman Service. Larger companies who are not satisfied with the results of the review can consider whether to take action through the Courts.
A ‘non-sophisticated’ customer is generally a small business unlikely to have possessed the specific expertise to understand the risks associated with these products. The definition of ‘non-sophisticated’ customers has been amended as a result of the scheme, meaning more companies will meet the criteria for banks to review their matters.
Previsouly, the FSA defined a sophisticated customer as a customer who satisfies at least two of the following:
– A turnover of more than £6.5m;
– A balance sheet of a total of more than £3.26m; or
– A company with over 50 employees.
This excluded many potential claimants to the scheme and in it’s report, the FSA has concluded a non-sophisticated customer will be a customer who meets (only) the balance sheet and employee number criteria where the total value of their ‘live’ interest rate hedging product is equal or less than £10m.
Martin Wheatley, CEO designate of the Financial Conduct Authority, said:
“Small businesses will now see the result of the review as the banks look at their individual cases. Where redress is due, businesses will be put back into the position they should have been without the mis-sale. But it is important to remember that this review is firmly focused on the particular circumstances of each sale. These will determine whether there were failings in the sales process and, if so, whether redress is due.”
The FSA has also been reviewing sales of interest rate hedging products by Allied Irish Bank (UK), Bank of Ireland, Clydesdale and Yorkshire banks, Co-Operative Bank, and Santander UK. The FSA aims to be able to confirm these banks can launch their reviews by 14th February.
If your business has been mis-sold an interest rate swap agreement, contact us now on 0116 266 5394 for a no obligation discussion.
Frances Jacobs is one of our Solicitors in Leicester, who are all experts in their fields and dedicated to quality client care. If you would like to find out more about our solicitors in Leicester please contact us.
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