After a long wait, the FCA Review of interest rate hedging products (IHRPs) is finally under way, which means that bank customers now face a tricky decision on how to approach the “fact finding” stage of the review. This is a critical stage in the process and any complacency on the part of the customers could result in an unsatisfactory outcome. The phrase that should be heeded is the classic 'failing to prepare is preparing to fail'.
FCA REVIEW OPTIONS
As previously commented on in this blog, the customer has the option to give their testimony in:
1. A face to face meeting with the bank’s testimony taker (providing them with witness statements); or
2. Written submissions for the reviewer (and witness statements); or
3. Attend the face to face meeting and provide written submissions (and statements); and
4. Providing information by telephone conference call to a testimony taker.
The choice between the above may not be easy. If the customer opts for option 1 they could risk overlooking certain elements of their case in giving answers to the testimony taker’s questions. If they elect option 2 they may have lost the opportunity to express to the bank the harm that has been caused to their business. Further, if the customer is time-barred or is reluctant to litigate then they may be intent on having their “day in the FCA Review meeting room”.
Option 3 is a 'blended' approach of providing written submissions to the testimony taker and providing further information at the meeting. However customers should be wary of questions that are asked by the reviewer which may be asked in such a way as to elicit a specific response from the customer which could prove damaging to their position. If the customer blurts out a response then this could be taken out of context to weaken the customer's position (although the customer's representative should ask questions of the customer to clarify the context to ensure the reviewer does not get a misleading impression). If a blended approach is going to be adopted then the customer should keep in mind the risks of doing so.
Option 4 is perhaps the least attractive as some people may become anxious speaking on the telephone to a testimony speaker and may mishear the testimony taker if the line is not clear. For those customers who view the meeting as an opportunity to vent their factual story then a phone call will perhaps not be a satisfactory way to provide their information. Any witness statements or other supporting documentation will need to be sent to the testimony taker which could result in mislaid documents or lengthen the decision-making process.
In some cases we have handled it has been appropriate for the customer to enter into a meeting, albeit fully prepared, and give their account verbally. In other cases, it clear that the interests of the customer would be best served by setting out their submissions to the bank in writing. Ultimately it is the customer’s choice, but it can often be difficult to be objective in circumstances where the customer is aggrieved at the actions of the bank.
If you are unsure which option is suitable for you or your business, then we would be happy to assist you. We have experience assisting clients to prepare for their face to face meetings and preparation of detailed written submissions. Please feel free to contact a member of our Financial Services & Banking Disputes team for a brief informal chat on 0131 226 8200 to see whether we can be of assistance to you.