CONTACT US 01312268200

Banks Admit Misselling to SMEs

Posted on Jun 28, 2012 by Liina Tulk  | 0 Comments

The Daily Telegraph reported today that Barclays, HSBC, Lloyds Banking Group and RBS admitted misselling complicated interest rate hedging products to SMEs (small and medium sized enterprises) and have agreed to compensate businesses after the FSA said it had found “serious failings” in the way they marketed to some customers.

The UK’s four biggest banks have all agreed to immediately halt the sale of complex interest rate hedges to smaller businesses and have pledged to compensate potentially thousands of businesses that have suffered hundreds of thousands and even millions in costs, which they were never made aware of at the time of taking out the swaps.

The FSA has received personal assurances from chief executives of the large high street lenders that they would ensure all complaints are treated fairly. Further, the FSA has publicly stated that it believed the products had had a “severe impact” on some small businesses and that it expected banks to provide “appropriate redress”.

Cat MacLean, partner in MBM Commercial, Edinburgh, which is representing business clients with related claims against major banks stated in the Scotsman today: “It seems to me vital, if this approach will be adopted, to ensure that the assessment process listens carefully to the customer to ascertain whether the customer truly understood the downside risk. None of our clients really understood the downside risk associated with a hedge or swap, not least because the banks were keen to minimise any downside risk.”

MBM Commercial anticipates the missold customers will be divided into two categories: those who were sold relatively simple products, who are expected to have the opportunity for their cases to be reviewed; and those who were sold more complex products or were unlikely to have understood the downside risk they were taking on.

Cat MacLean emphasised that for those deemed not to have understood the downside risk, whose case may be reviewed by an independent assessor and who may be compensated appropriately “if there is evidence of mis-selling”, the challenge must be is to ensure: (i) that the independent assessor does not suffer from the malaise which seems to affect the Financial Services Ombudsman, where claims can languish for months if not years, and who rarely uphold claims made against banks; and (ii) that sufficiently detailed and relevant evidence is given to the independent assessor to establish clearly the evidence of mis-selling.

MBM Commercial has a significant number of clients who believe they have been mis-sold swaps and greatly welcomes the long awaited FSA finding of misselling by UK’s major banks

Becoming A Leader Others Want To Follow
Herald Scotland News Article: MPs Challenge Govern...

Contact us

Invalid Input
Invalid Input
Invalid Input
Invalid Input
Invalid Input
Invalid Input

Contact us

Invalid Input
Invalid Input
Invalid Input
Invalid Input
Invalid Input
You must confirm you have read and accept our Website Privacy Policy.
Invalid Input