Alison Loveday comments on the compensation package announced by the FSA and four leading banks.
The decision by HBOS, Barclays, Lloyds and RBS (to include NatWest) to compensate their customers, following their discussions with the FSA, are very welcome. It is important to appreciate, however, the following:-
1. The compensation scheme only applies to the four named banks. Interest rate swap products were sold by many other banks as well. What will happen to their customers?
2. The compensation will only apply to certain customers with certain products – not all customers who feel they have been "mis-sold".
3. There is no detail in the scheme to date and the reference to customers being awarded "appropriate redress" could potentially be interpreted in many different ways.
4. Another key definition in the scheme is that of the "sophisticated customer". We anticipate that there will be some dispute in defining who is a sophisticated customer.
5. Many customers will still be forced to follow the bank’s standard complaint procedure.
6. Given the significant number of customers affected it will be essential for the banks to dedicate sufficient staff and resources to dealing with the complaints. Many businesses are already under significant financial pressure as a result of these products
and face going out of business unless their complaints are handled promptly. This could potentially add to the losses suffered by the customer, which ultimately they will look to recover from their bank by way of "appropriate redress".
7. There is a 6 year limitation period for bringing legal claims and it will be important therefore for customers to be very mindful of this time limit.
The FSA has itself confirmed that customers should not simply wait to be contacted by the bank, even if they are eligible under the compensation scheme proposed. Rather, it has recommended that customers lodge a formal complaint. Our clear advice is that
if any customers have concerns they need to take advice now so that they are clear what the strength of their claim is, what the time period for bringing it would be (including any limitation date), and what compensation they might hope to recover.
The political climate has changed dramatically in even the last week and we are very hopeful that the banks will now be more sympathetic towards its dealings with customer complaints. Any attempt by the bank to take retaliatory action in response to a customer
complaint is likely to lead to even more adverse publicity and, could increase the compensation being sought.
For further information as to how you can ensure that your complaint is dealt with by the bank as a priority, please contact Alison Loveday on 0161 833 9211 (email@example.com)
The information and opinions contained in this article are not intended to be comprehensive or to provide legal advice. No responsibility for this article’s 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 the contents of this article.