Over the course of the last two years we have blogged quite regularly about the FCA Review of Interest Rate Hedging Products. It would appear that the bank led review process is currently in the process of winding down as most cases have been processed and decisions issued. So far 17,000 businesses have gone through the review process with £1.8 billion being paid out in redress payments.
Last Chance to Enter the Scheme
Following this trend the FCA has announced a deadline of the 31 March 2015 for all claims to be submitted in to the redress scheme. This deadline affects all swap customers who feel they were mis-sold hedging products but who were not automatically considered part of the review process by their banks.
Inclusion of Caps
This deadline will also affect customers who took out interest rate caps. Previously customers who purchased these products were told that they would only be included in the review if they complained to their bank.
The reason for this is that caps were considered to be the most straightforward of all of the hedging products. Furthermore they often did not result in as big losses for customers compared to collars and swaps. Whilst taking out a cap would incur an upfront cost (swaps and collars did not), getting out of a cap would not result in breakage costs. As such one of the key elements of miss selling, the failure to adequately explain breakage costs, was absent from cap sales.
That said, in some cases, these products were still undoubtedly miss sold.
Missed the Deadline?
It is worth bearing in mind that missing this deadline will not be fatal in all cases to making a claim out with the review process. Customers may be able to:
- Complain to their bank via their usual complaint processes.
- Refer the complaint to the Financial Ombudsman Service. The availability of this option is subject to the size of the business (it must have a turnover of less than £1.59m and fewer than ten employees). A complaint must also be made within six months of a final complaint response from the bank. It is also worth bearing mind that compensation under this scheme is capped at £150k.
- Raise court proceedings (provided the case is still in time)
We have recently seen some banks writing to customers who have not to date been part of the scheme to make them aware of this deadline. This however is not the case with all banks and the onus is on the customer to make the complaint in order to ensure they are part of the review.
If you have any queries arising from this article, please contact our Dispute Resolution team on 0131 226 8200.
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