Posted on Jul 22, 2012 by | 0 Comments
The FSA has now announced the role and the responsibilities of the independent reviewer and what customers should expect from the exercise.
It seems from the recent announcement that the independent reviewer is likely to be an accountancy firm, a compliance consultancy or a law firm.
The banks will nominate the independent reviewer to the FSA for approval. If a conflict of interest arises then a second independent reviewer will become involved.
The independent reviewer will review the intended redress exercise to ensure that the banks will:
1. fairly assess whether each hedging product sale complied with regulatory requirements.
2. fairly calculate the compensation in each individual case.
3. fairly classify customers by product and sophistication. This is important because if customers are found to be "sophisticated" then they fall outwith the review.
4. Gather appropriate evidence and take into account all the relevant individual circumstances of the customer.
In order to ensure the customer is not disadvantaged, the customer can request the independent reviewer is present at meetings and telephone calls. In addition, the independent reviewer will produce a report setting out their assessment of the compensation exercise and past business review.
However despite the above measures, we remain concerned about the lack of detail. For example, what happens to a liquidated company or a bankrupt customer's claim? Moreover will customers trust an independent reviewer who may have acted for the bank albeit many years ago? Finally will the bank employees who undertake the mis-selling compensation process be different from those who have previously dealt with previous complaints by the customer?It is vital before the compensation process begins that customers are fully informed.
No doubt the above questions will be answered in due course but at present we remain unconvinced of how fair and reasonable the process will be to customers wronged by the banks.