We are now fast approaching the two year mark since the Financial Services Authority (now the Financial Conduct Authority (“FCA”)) announced a review into the sale of interest rate hedging products (“IRHPs”). Much has happened over that period.
One should never forget that the very fact that there is a review is quite a novel position. The hard work undertaken by Bully Banks and lobbing by law firms such as Berg on behalf of its clients assisted in bringing about this unique review. The start of
the review process saw much confusion and failures on the part of the Financial Services Authority. It was very difficult, and at times impossible, to be provided with anything near sufficient amounts of information regarding what the review would be and
what the results of the review would look like.
The results of the pilot study were issued on 31 January 2013 and the review proper started between March and May 2013. At the end of February 2014 the statistics from the FCA are quite intriguing. The review has found an approximate 96% of all sales did
not comply with the prevailing regulations that governed such sales. The Banks have paid out £482m to 3,430 consumers. 962 businesses were informed that they would get no redress, 10,536 were told that they were sophisticated, of which 5,334 was because
they had a notional sum in excess of £10m. Surprisingly 846 interest rate caps appear to all have been offered redress as well.
So the question that remains is “What next?”.
There are 10,536 businesses who were not assisted by the review and 962 who had a negative outcome from the review together with 581 who were offered an alternative product. It would appear from averaging the sums paid out that very few businesses have been
offered consequential losses.
Therefore, Berg is in the progress of assisting these clients. Berg is also, as a consequence of the findings of our clients, assisting clients with regards to issues relating to RBS’s use of its Global Restructuring (“GRG”) division together with Lloyds clients
who have found their assets devalued and/or their loans sold to an aggressive debt purchaser, together with National Australia Bank clients who have found their lending has been frozen.
With regards to those that have not received adequate (or any) redress under the review the options are quite stark. The review has no right of appeal. This is the reason why instructing experienced and suitable representation during the review is essential.
For those that fit the criteria of a micro enterprise there is the possible option of going to the Financial Ombudsman Service. However, the Financial Ombudsman Service tends to find as often in favour of the Bank as the consumer. Barclays Bank plc is the
only Bank that bucks this trend, with the Ombudsman finding in favour of the consumer (over-all, including PPI) 70% of the time.
There is also the option for those that are not time barred under the Limitation Act 1980 to take action through the Courts. This step should only be taken after full consultation with an experienced commercial practice like Berg. As has been seen from the
Green & Rowley v RBS and Grant Estates v RBS (Scotland) the rules of Court make bringing a claim through an expensive ordeal that may not necessarily result in judgment being found in favour of the consumer. Ironically, RBS has paid both Green & Rowley
and Grant Estate under the terms of the FCA review.
What should you do next? If you do need assistance you should contact Berg’s Banking & Financial Disputes Team. Taking legal action against a Bank should be a last resort. It is essential to open dialogue with the Bank correctly under the terms of the Civil
Procedural Rules. It is also essential that you understand your rights together with the positives and negatives of your case.
Equally, as Berg has been advising for a number of years now that there is a six year limit on the ability to bring a claim through the Courts or through the Ombudsman Service. There are, for some cases, technical rules that may dis-apply the 6 year rule.
However, you should have an experienced law firm such as Berg review your case to identify this.
Also, if you are subject to RBS’s use of GRG or you have had your assets revalued by Lloyds resulting in an LTV breach and/or your lending has been sold to a debt purchaser and you are now facing administration please contact Berg’s Banking & Financial Disputes
Team on 0161 833 9211.
For more information about any of the above or for practical commercial advice on this or any other aspect of banking and interest rate swaps, please contact
by telephone; 0161 833 9211 or email.
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.