FCA getting tough on banks for delaying interest rate swap redress?
The Financial Conduct Authority (FCA) has contacted banks encouraging them to speed up their review interest rate swaps sales.
Following a pilot review of the sale practices, the FCA found that more than 90% of the sales failed to comply with at least one of the regulatory requirements. As a result banks were ordered to conduct a thorough review of their products.
Ten months on the vast majority of businesses remain out in the cold, prompting the FCA to re-contact banks to make their ‘expectations clear and agree practical ways to speed up the process’.
However will this slap on the wrist have the desired effect? Swaps lawyer, Simon Cottrell, isn’t holding his breath:
“By failing to set clear deadlines from the outset, the FCA ultimately gave the banks control over the situation and the speed in which they respond to interest rate swaps cases. A letter of encouragement isn’t going to remedy that now.”
Some lenders, including HSBC and Lloyds Banking Group, have agreed to ‘fast track’ redress for affected businesses by splitting the repayment process into two-stages. The first will see businesses receive compensation for the cost of taking out the swap while the second stage will reimburse for any consequential losses such as loss of business or legal fees.
“It is important that businesses are not misled by this new process,” continues Simon Cottrell whose team of lawyers is assisting many SMEs mis sold a swap product.
“There have been claims from within the industry that businesses are being discouraged by the FCA from putting in claims for consequential losses. In order to recover the true cost of the swap, we urge businesses to consult a qualified lawyer who specialises in this area of mis selling.”
Content correct at time of publication