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RBS: Working Hard to Put Things Right?

Posted on Jul 04, 2012 by Cat Maclean  | 0 Comments

Thousands of RBS customers yesterday received an email in the wake of RBS’ embarrassing computer glitch. Headed “Working Hard to Put Things Right” it assured customers that the Bank had now fixed the underlying technical issue and was now working hard to help customers that had been affected.

The email went on to assure customers that “We made a promise that no customer will be left permanently out of pocket and we intend to keep it. We will automatically reimburse all of our customers' fees, charges and interest on their current accounts, credit cards, mortgages and loans where they have been charged or overcharged as a result of the incident.”

If this is correct it is indeed laudable that the Bank have faced up to their failings, recognised the cost to the customer and responded with admirable speed to try to put things right.

However, I am driven to ask whether the same treatment will be meted out to those customers who have been mis-sold interest rate swap agreements.  Many had no idea what a swap was and were left little more enlightened after the “selling” process. Some were asked to sign “undertakings to hedge” without any discussion or explanation as to what they were signing. Only once they were contractually bound to take out a hedge or swap product was the concept explained to them to any extent. Others, having previously declined the bank’s offer to sell them a swap, were then forced to take out a swap product anyway only weeks later after the Bank “found” that the customer had just breached its loan to value covenant. Yet more customers were “sold” hedge and swap products for which they were simply wholly unsuited. Will these customers receive such swift and uncompromising apology? Will they be contacted with unreserved promises of reimbursement?

Whether and how this Bank, and the other UK clearing banks implicated in the swap mis-selling scandal, implement the FSA’s in principle commitment to reimburse customers who were mis-sold swap products, remains to be seen. As we blogged yesterday (“Compensation Procedure for Misselling Claims”) the process envisaged by the FSA is far from straightforward and provides opportunity for the banks to weed out many claims on the grounds that the product sold was relatively straightforward or that the bank in question believed that the customer understood the downside risk. It would appear that only if the bank agree that the customer may not have understood the downside risk will the claim be referred to an independent assessor. We can only hope that the banks will take as fair and as enlightened an approach to the assessment of swap mis-selling claims as RBS appear to be taking i

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