The three billion pound loan swap scandal where businesses were mis-sold interest rate swap products by banks has been making headlines for the past couple of months. Now, the Financial Conduct Authority has admitted that more firms have been affected than previously thought. In the past, the FCA estimated that 50,000 firms had been affected by the mis-selling scandal. Now, they are stating that as many as 100,000 firms may have been affected by the scandal.
Martin Wheatley is the chief executive of the radiator. He has stated that many more firms have been sold the PPI products. These products were designed to protect customers from increasing interest rates. Even though the PPI products were designed to help people save money, they actually ended up costing people a lot more. In fact, the firms ended up with bills that cost hundreds of thousands of pounds.
There was a letter written to the Treasury Select Committee that stated that the contracts of 40,000 firms are currently being reviewed. The letter was written by Mr. Wheatley. Despite the fact that the letter was written seven months ago, it has recently been released. John Murso, who is a member of the Treasury Select Committee, requested that the letter be released.
Wheatley stated that there are 60,000 other products that have similar features as the interest rate swaps. They also have the same risks. However, because they are embedded inside of a commercial loan, the regulators do not have the power to investigate them. These types of loans are not regulated by the Financial Conduct Authority. In the letter, Wheatley also stated that the 60,000 swaps made in commercial loans date back to 2001. Furthermore, he noted that this was a problem that could potentially be significant.
Wheatley also stated that he is concerned about the banks who used this regulatory loophole to sell interest rate swap deals. Some banks may consider embedding their interest rate products inside of commercial loans in the near future. If they do that, then they will be able to avoid regulatory oversight.
All of the major banks in the country have agreed to pay the customers who were mis-sold the payment protection products. However, they have not come up with a plan to compensate the people who had been affected by a swap that was embedded inside of a commercial loan.
Banks have already set aside three billion pounds in order to compensate people who had been a victim of the mis-selling scandals. However, if customers take the time to challenge the “embedded” swaps, then the final bill could be a lot higher.
It is important to remember that payment protection insurance can be very useful, especially when it is sold alongside a mortgage, loan or credit card. The problems resulted when the PPIs were mis-sold, and banks ended up spending more money instead of saving it. Payment protection insurance mis-selling is not something new. The first PPI case took place in 1992. The plaintiff won the case because they were able to prove that the insurance premiums were higher than the potential benefits.
News for Interest Rate Swaps
FCA needs additional powers to extend interest rate swap redress
The Financial Conduct Authority (FCA) was formed nine months ago as a successor to the Financial Service Authority (FSA), which regulated the British financial services industry during the twelve years of its existence
Swap Claims Compensation Too Slow, Says FCA
The Financial Conduct Authority (FCA) has stated that compensation for swap claims has been too slow, and that some businesses may suffer because of the delay.
What is the FCA Sophisticated Customer Test?
In January 2013, the FCA published what it found with regard to the pilot review scheme for the mis-selling of IRHPs, or interest rate hedging products, otherwise known as swaps.
Interest Rate SWAP Scandal Exposed
BBC Panaroma has recently learned about a costly swap scandal. Banks who mis-sold these Interest Rate Swap products could be fined by a regulator.
Tim Capper reports on Financial Mis-Selling for Maple Leaf Financial. Our aim is to ensure you get honest advice and proper guidance to ensure a suitable recommendation can be made to pursue a financial claim
Latest posts by Tim Capper (see all)
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