Lloyds claim swap costs will be “immaterial”
An insightful but worrying article in the Telegraph this morning reports claims by Lloyds that the Bank regards the impending cost of swap compensation as likely to be “immaterial”. As the Telegraph points out, this is a somewhat presumptuous claim given that the process of compensation to be governed by the FSA is not yet implemented with huge uncertainty over how claims will be dealt with and at what cost.
As we reported in previous blogs, it now appears that each Bank is to be given free rein to construct their own review process. The FSA must approve the scheme proposed by the Bank but subject to FSA approval the Bank will then act as the initial “gate-keeper” with an independent reviewer (again selected by the Bank itself) acting as auditor of the process.
This seems to me a remarkably skewed process and in light of what is proposed it is hardly surprising that the banks think the costs will immaterial, since it is the banks themselves who will be controlling the compensation process.
When will the FSA wake up to the fact that the process currently being implemented is deeply flawed?blog comments powered by Disqus