Interest rate swaps is a type of insurance policy offered to firms by banks if the interest rates fluctuated to their disadvantage. As firms took loans between the year 2001 and 2008, most of the financial institutions offering loan services had in place this insurance cover. The only loop hole with swaps was that it didn’t explicitly define the extent to which the cover was to go on the occurrence of the event. The policy used to avoid including extreme events in the contracts in order to sell more policies as well as maintain their customers.

Following extreme low interest rates in the financial markets in the year 2008, even those who had this insurance cover found themselves paying huge amounts for what they thought was secure means of edging risk. The financial conduct authority is discouraging all the victims of interest rate swaps from pushing for reimbursements for losses.

The financial conduct authority ruled out that the compensation be granted to the firms by their banks for the direct loss incurred and also for other losses emerging from the interest rate swap. This verdict was passed by the authority affected over 30,000 firms across the United Kingdom. Analyzing this ruling, lawyers point out that the financial conduct authority is on the side of the banks. Their main reason to say claim so is because every covered policy holder has the ultimate right to receive compensation after incurring loss. From this every one can see clearly that its not justifiable to pass that ruling.

So far, only 32 enterprises have benefited from the verdict 16 months later. The total compensation granted to these few firms is worth £2 million. From the way payments are being executed, it’s clear that consequential loses are not being honored as they should. Most of the victims were unable to conduct business in the normal way while others were unable to win sales deals which can be classified as consequential loses.

There has been pressure from critics of financial conduct authority basing their argument on the facts already laid down and what should be taking place. For example, a total amount of three billion sterling pounds has been set aside by the defaulting financial institutions. This is such a small percentage to the ten billion sterling pounds expected of them as investigations done on the claims allege. The critics also cite that by telling the victimized firms not to claim for compensation, the financial conduct authority will be obstructing justice and taking lightly the catastrophic impact of the interest rate swaps. The critics are advocating for those firms whose claims are genuine to come forward and claim as it’s their right.

Lawyers and other activists in the financial sector who are criticizing the financial conduct authority tend to address the feelings of the victims on the subject. This is because after getting insurance cover and keeping the terms of the contract such as premium payment, there is no reason, whatsoever, that justifies the verdict passed by these financial authorities. if the consequential loss ruling holds, then many innocent firms will fail to get justice.

FCA”sophisticated” customer test


Interest Rate SWAP News

Only 22 Businesses Compensated over Interest Rates Swaps

Banks are slowly but surely compensating small firms that have been mis-sold interest rate swap products. Firms have been waiting six months to get compensated. The Financial Conduct Authority, which is also known as the FCA, has stated that the progress has been much slower than they had anticipated. In September, only 22 got redress. There have been over 30,000 cases reviewed.

Read More


FCA: Interest Rate SWAP redress set to Increase

One of the biggest scandals to affect the financial industry in recent decades has been the rise to prominence, and subsequent crash, or interest rate swaps and related securities. In a period of stock marketing trading and banking practises that were generally less regulated than in earlier eras, these products played a central role in boosting consumer fortunes and building up economies both in the United Kingdom and around the world. Their subsequent fall from grace led to one of the biggest financial crises of the last half-century.

Read More


Interest Rate Swaps : FCA Fair & Reasonable Redress

The regulatory failings of bank interest rate swaps have left thousands upon thousands of disgruntled customers looking for redress. Fair and reasonable redress, including consequential losses, by the banks and the FCA helps put customers in the same position they would have been in if the regulatory failings had not occurred.

The exact definition of fair and reasonable redress is malleable as it varies from case to case. In each case, the testimony of the customer and the evidence is reviewed by an independent reviewer to determine the appropriate redress. Therefore, when discussing fair and reasonable redress, it is important to have an understanding of basic redress and consequential losses.

Read More


Interest Rate SWAP Claims

Maple Leaf Financial have a specialist team of solicitors dedicated to dealing with the mis-selling of interest rate swap protection products by the banks. We are happy to review these relatively complex swap arrangements and to claim compensation for our clients where appropriate.

Read More


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


The following two tabs change content below.

Tim Capper

Bringing you financial news and information in plain english for Maple Leaf Financial. My aim is to help readers understand these often complex financial instruments.