The Banks have started putting out their six monthly results. They are illuminating.
As you know, in 2013 Barclays put aside £650 million for redress arising out of the FCA-led Review (“the Review”) into the sale of interest rate hedging products. In their end of year accounts they said that they had overestimated this provision and were paying
out less than anticipated. Practitioners around the country are now of the opinion that Barclays appears to have taken a policy decision not to pay any consequential loss claims. We have invited any customer to contact us if they had a consequential loss
claim paid out that is more than a three digit amount. We have not yet had confirmation from other solicitors, Bully Banks customers or indeed any customers of Barclays that have succeeded in being offered consequential losses.
The Independent Reviewers are tasked with overseeing the fairness and propriety of redress outcomes and will have endorsed the seemingly blanket refusal of each consequential loss claim. The FCA is happy that the Independent Reviewers are truly independent
and are effectively undertaking their role.
It cannot be simple coincidence that all Barclays’ customers have not suffered genuine losses that have arisen from entering into IRHPs.
In Barclays six monthly accounts just released, they confirm that they have, for the second quarter, put nothing aside for consequential losses.
Royal Bank of Scotland
RBS has had significant costs due to a re-structuring and its many legacy issues. RBS has announced that it has set aside an extra £100 million. It would appear that RBS customers stand a better chance of succeeding in the Review than their Barclays counterparts
because RBS perceives that it will actually have to make sizeable redress payments.
Lloyds Banking Group
As we announced earlier this week, Lloyds Group has been fined for both the transgressions of HBOS and Lloyds itself. Lloyds also has punitive PPI reparations to make due to it offering its staff significant bonuses during the years of hard-selling. For staff,
customers were viewed as a means to being able to attain higher bonuses. Lloyds has since been fined £28 million for this.
In their six monthly results Lloyds has confirmed that it has set aside further monies as detailed in the results summary:
“A further provision of £50 million has been made relating to the past sale of interest rate hedging products to certain small and medium-sized businesses. This brings the amount provided to £580 million, of which £218 million relates to administration costs
and £161 million remained unutilised as at 30 June 2014. During the first half, the Group has made good progress in dealing with this issue, having reviewed 95 per cent of the sales currently in scope.”
Lloyds and RBS continue to put money aside to try and repay the customers to whom they sold hedges. Barclays appear to see no requirement to put aside any further monies to cover any cases not yet reviewed and in relation to any consequential loss claims.
The latest figures for the FCA have not changed since our last update. There are still, as at June 2014, 2,400 people or companies that have made consequential loss claims. 600 have been successful and had £1 million paid out to them. This would work out
at an average of £1,700 each which is a disturbing statistic. The really pressing question is how many people received substantial sums of money (ie six figure settlements). A Freedom of Information request to the FCA by Berg confirms that the FCA does not
have access to “this kind of information”. This is an astonishing admission.
For more information about any of the above or for practical advice on this or any other aspect of banking and financial disputes, please contact Kalvin Chapman of the Berg Banking Litigation Team on 0161 833 9211 or email him at
(The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Berg or any of its partners or employees. Professional legal advice
should be obtained before taking, or refraining from taking, any action as a result of this article.)