Posted on Feb 21, 2013 by | 0 Comments
On 31st January the FSA revealed the results of the pilot review of interest rate hedging products (IRHPs) sales and announced that Barclays, HSBC, Lloyds and RBS would start work on the full review process.
Further to this Barclays have now set out their approach to the review process, which will broadly comprise 5 stages:
1) Assessment of sophistication (as set out in the FSA Pilot Findings Report)
2) Notification letter to non-shophisticated customers
3) Fact finding from customer and bank
4) Decision on redress
5) A meeting with the customer, if redress is due, to discuss the proposal
It is important to note that customers assessed as non-sophisticated who bought an IHRP will be sent a notification letter, BUT only customers who bought a structured collar will be automatically included in the review. Barclays will ask customers who have been sold anything other than a structured collar IHRP if they want to be included in the review.
Customers who respond by notifying the bank that they want to be included in the review will be included, however it is not 100% clear what will happen if customers do not actively notify the bank that they want to be included. If you receive a notification letter and want to be included in the review it would be sensible, at this stage, to notify this to the bank in writing.
Barclays’ "fact find" process will be carried out by the law firms TLT and Eversheds. Their role is to gather all relevant documents and statements from customers and the bank and “summarise in an impartial manner that factual information” for the bank’s decision makers. Barclays seem at pains to stress that TLT and Eversheds will not be providing an opinion to the bank on whether there was mis-selling or redress is due, but simply information gathering.
The decision makers on redress are Barclays’ Customer Review Team, made up of Customer Review Directors who are not lawyers or IHRP salesmen. Each decision will be scrutinised by an Independent Reviewer, which in Barclays’ case will be someone from KPMG LLP or Deloitte LLP.
It is worth noting that, if customers reject any redress proposal and proceed to the Financial Ombudsman or through litigation, all fact find interviews and other documents produced during the review, including Barclays’ internal fact find and documentation, may be referred to in any such complaint or litigation.
Despite Barclays noting that the fact find will not be a legalistic process and that the whole review process has been done on the basis that customers do not need to obtain legal advice, they acknowledge that they may cover legal costs if the advice relates to i) a redress proposal which the Bank has made and (ii) the Bank has agreed in advance with the customer to bear such costs.
Please feel free to get in touch with a comment or contact me for more information.