As many swap customers will be aware, following the Financial Conduct Authority (FCA) discovery of ‘serious failings in the sale practice of interest rate swaps’, banks have begun to contact customers in writing to confirm the next steps in the review process. These next steps will include a fact finding meeting.
These fact finding meetings are portrayed by the banks as a friendly and approachable way in which information can be “shared” in order to help process the customers’ claims. The reality however is rather different. The meeting is led by the banks on their terms and organised to assist the bank in its aim of minimising liability where possible. There is little sharing of information and customer should be prepared to be cross-examined. Banks will insist that the meeting is “with prejudice” rather than “without prejudice” so that the answers given by the customers will be recorded and will be taken into account in assessing whether or not compensation is to be awarded.
Crucially, the bank will phrase and structure the questions asked in a way that could catch the claimant out. The fact finder conducting the meeting will generally be looking to elicit evidence from the customer which could undermine their claim, and will be cross-examining the customer looking for evidence to show:
- that the customer did not believe that he or she was being given advice by the bank
- that the customer’s banking history and habits suggested that they would always have chosen to go down the route of fixed interest rather than variable
- that the swap was a condition precedent of the loan (ie the customer was forced to take out the swap) because this indicates that there was no “sale”
- that the customer cannot clearly remember the meetings or discussions in which the swap was sold to them
- that the customer’s account is internally inconsistent
- that the customer would have gone ahead with the swap anyway, even if the bank had not breached the COB Rules
Customers have the option to have the meeting recorded. Since the bank will always be relying on what is said by the customer at the meeting, it makes sense for the customer to opt to have the meeting recorded and to request a copy of the recording.
Customers should also be aware that the bank is unlikely to produce any documents relevant to the claim at the fact finding meeting. Where at all possible, to make the fact finding meeting less one sided, claimants should try to ensure a full exchange of documents before the meeting. This is admittedly not easy to achieve given that the bank frequently hides behind the Data Protection Act in refusing to release documents to partnerships or companies even where the partners or directors make a direct request for the release of their personal data. Where the bank has refused to release information to the customer ahead of the meeting, the customer should ensure that it is placed on the record at the meeting that the bank has refused to disclose documents which have been requested.
The most effective way of delivering a case during a fact finding meeting is to prepare submissions ahead of the meeting. These submissions can then be referred to throughout the meeting to ensure that only relevant information is provided. One of the main ways in which the lender can refuse a claim is if the claimant does not produce an accurate or detailed account of the events surrounding the sale of the swap. Without a clear picture of the sales process and the advice given it is easier for the bank to “weed out” the claim and submissions can help to establish the relevant information needed to prove the claim.
There are many pitfalls for the unwary in the process which has now been rolled out by banks. Customers should have at the forefront of their minds that the banks will be looking for every opportunity to eliminate the customer’s claim from the review process. Therefore to protect your interests as much as possible and to give yourself the best possible chance of a successful claim, having a professional adviser present in the fact finding meeting is highly recommended. Anyone who would like advice before a meeting should contact us here and we would be happy to help.