RBS fails to cater for IRSAs consequential loss claims
The Royal Bank of Scotland has confirmed it has not made any provision for consequential losses suffered by clients mis sold an interest rate swap agreement (IRSA).
Despite acknowledging that small and medium enterprises (SMEs) may be entitled to compensation for any consequential losses, the lender claims it cannot accurately measure such liability and therefore is unable to make any provision.
In a statement in its third quarter results, the bank stated:
“[RBS] is now making steady progress after a challenging start with its review of sales of interest rate hedge products and expects to complete this and provide basis redress to all customers who are entitled to it by the end of May 2014.”
Consequential losses, which include loss of business and legal fees, had been blamed for the delays surrounding the redress payments for interest rate swaps mis selling.Senior partner Simon Cottrell, whose team of swaps lawyers are assisting affected SMEs, comments:
“It’s a little confusing how RBS is unable to make even an estimation surrounding its liability for consequential losses when other lenders have not communicated similar difficulties.
“Eyebrows were raised when lenders agreed to split the redress process into two stages with claims for consequential losses coming after the cost of taking out a loan had been compensated. Whilst lenders appear receptive and dedicated to reimbursing the clients to whom they mis sold an interest rate swap, many believe the reality of this two-stage process will result in many clients neglecting to make a subsequent claim for consequential losses, therefore limiting the lender’s liability. In fact the FCA has said as much when highlighting the additional 8 per cent interest that will typically be offered to clients on top of their redress.
“RBS’s failure to set anything aside for consequential losses would suggest it too is banking on client inaction. They haven’t banked on the team of swaps lawyers at Goldsmith Williams however, who will ensure clients receive all the compensation they deserve – consequential losses and all.”
Content correct at time of publication