Interest Rate Swap Redress – could you be entitled to more?
Interest rate swap misselling is the latest scandal to rock the finance industry and has resulted in the banks paying out £1 billion in redress to over 6,000 customers since August 2013.
If your bank has already been in touch offering redress, great news, but could you be entitled to more?
The FCA review
As a result of widespread concern about the banks selling complex interest rate swap and interest rate hedging products to businesses without explaining the risks involved, the Financial Conduct Authority (“FCA”) has ordered banks to conduct a review of potentially missold products and offer redress where failings are identified. The review started in May 2013 and the first pay outs were made in August 2013. The review is ongoing and more and more companies are receiving letters from the banks offering redress.
The FCA review required banks to look into interest rate hedging products sold to clients between December 2001 and October 2007. Once it has been established that the sale of the product falls within the criteria, the bank will carry out a sophistication test looking at the number of employees and the size of the business. This test is intended to determine whether the company was sufficiently “sophisticated” to properly understand the nature and risks of purchasing the swap.
What to do if your business is offered redress
If your company is found to be eligible for redress under the review and is offered a sum of money by your bank it is important to take professional advice on the amount offered and how this has been calculated.
The redress should be determined on the basis of what is fair and reasonable in the circumstances which means putting the customer back into the position they would have been in had the regulatory failings not occurred, including any consequential loss.
If you are not satisfied with the amount of redress offered, the bank should offer the opportunity to turn down the amount offered and submit your evidence about why the amount offered is not enough. The Professional Negligence Team can help you to present your case to the bank to ensure that you receive appropriate redress.
Companies outside of the review
For larger businesses who are considered to be “sophisticated” or those otherwise outside of the review who are unable to obtain adequate compensation by that route, we can advise you on the options available to you, which may include issuing a claim and reaching settlement by agreement or having the case determined at trial.
Claims against the bank must be initiated within 6 years of the sale of the product complained about and clients thinking about pursuing a claim should be aware that waiting for the review process to be concluded does not stop the 6 year period from ticking on.
If you think you may have a claim then contact us today for free impartial advice.