Posted on Jun 14, 2013 by | 0 Comments
A group of cross party MPs were highly critical of the scope of the Financial Conduct Authorities swap miss-selling review process at a Parliamentary debate on Wednesday. The debate was at the request of (former banker) Bill Wiggins, MP for North Herefordshire, who raised a number of issues with the review process. Having dealt with a constituent swap customer who was excluded from the review process on the basis of the size of their business it was Mr Wiggin’s view that the current availability of redress to only certain customers “flies in the face of logic and reason and wrongly exclude a number of organisations from deserved recompense”.
- The review should be open to all businesses, irrespective of their size not just SMEs as defined by the FCA.
- Sophistication of a bank customer cannot be determined solely by size and balance sheet. The current distinction does not even cover all SMEs.
- There is mismatch in approach to sophistication. Some customers with highly complicated products are note being redressed while more borderline cases involving simple “caps” form part of the review.
Mr Wiggin’s comments drew support from other MPs and a call was made to extend the scope of the review process to all bank customers who have been miss-sold these products.
Treasury Economic secretary Sajid Javid however rejected the proposal to extending the scheme arguing that an objective test for sophistication was being used and that the FCA had struck the right balance. Furthermore Mr Javid stated that increasing the scope the review process may “weaken the incentives for businesses to act sensibly when purchasing financial instruments” potentially opening the floodgates to any business who had thought they had lost out.
The issue of sophistication and the ability to take part in the FCA review process is clearly an area of concern for many swap customers. It is interesting that the call to widen the scope of the review came from a former banker, who is well aware of the complexity of the products.