There appears to be a new development in the compensation plans, for the mis-sold interest rate swaps, that were purchased from the banking system. The compensation plan arrangement began, after several complaints about the complex derivative called an interest rate swap. Criticism developed with the purchasers of these complex derivatives saying that they were either pushed into buying a financial product, they knew nothing about, or they were sold this interest rate swap, as an unnecessary purchase.
The new developments in this banking compensation arrangement:
1. The four major banks Barclays, HSBC, RBS, and Lloyds were asked to review their banking customer accounts, that were related to this interest rate swap claim. Many of the customers of these particular banks were filing complaints about an interest rate swap product that was being mis-sold to them.
The Financial Services Authority began an investigation into these complaints. The customers said that they did not know what they were purchasing or why, as far as the interest rate swap products, that were sold to them as a part of their particular loan.
The customers were told that this type of product would protect against any interest increases in the banking industry, that related to their loan product. Some of the customers were left with an additional bill that included the interest rate swap product, even after their loan was paid out.
The customers were saying that the interest rate derivative was not necessary, for the effective servicing of their loan. Some of the customers went on to say that they were pushed into buying these derivatives, even though they were unsure what they were. The reimbursement for these derivative products began, after the customer complaints and after the FSA took up the case.
2. What has occurred of late is that two other banks have agreed to look into their own derivatives accounts, and determine if there have been any inappropriate transactions or sales. These two new banks, that have been added to the investigation list, are Clydesdale and Yorkshire banks, and these two banks are jointly-owned.
The banking administration has agreed to look at the sale of fixed-rate loans, that have been sold to small businesses. The addition of the tailored loans to small businesses in the investigation mix may add pressure on the other banks to follow with their own internal investigations. Also, added to the list of banks, who have agreed to audit their accounts for mis-selling to small businesses, is Santander UK.
3. The Financial Services Authority has located over forty thousand interest rate swap products, that have been sold to small businesses. This number of interest rate products includes fixed-rate loan products. The addition of the fixed-rate loan as an area of possible compensation from the banking industry is a significant amount for the banking sector to deal with. The FSA has indicated that there are eleven different loan types, that may have a form of mis-selling. These eleven banking products have now been banned from being sold by banks to small businesses.
4. There are some recent complaints that regulator’s are taking too long in determining how much of a compensation to issue out and to whom these compensations are to be paid to. The customers, who are complaining, are indicating that the delays are giving too much power to the banks, themselves.
5. Overall, the new developments in the interest rate swap claims have indicated that tens of thousands of new claims are eligible for possible compensation, by the banking systems that sold these financial products to these unknowing customers. The addition of Clydesdale and Yorkshire banks, to the list of possible banking customers for reimbursements, is causing a stir among the banking industry. These two banks have added on the tailored business loans products, that include the fixed-rate loan. This type of loan, the fixed-rate loan, is popular, with numerous customer accounts.
What it all means
The mis-sold interest rate swamp claims have increased in number, and the net has widened for the banks, to possibly reimburse for these claims. There may be thousands more that could be added to the list of customers, who may need some form of reimbursement. The addition of two other sizable banks, Clydesdale and Yorkshire, has caused some concern, because of the inclusive nature of these new types of loan products. The fixed-rate loan to small businesses seems to be the new addition.
This addition could be costly, since there are so many of these types of loans to small businesses. The derivatives features of these loans are currently in question and under review by the Financial Services Authority. There may be an enormous increase in potential compensation costs, since the number of these types of accounts is sizable. These reimbursement costs would be shouldered by the banks, who have the customer accounts.
Interest Rate Swaps Resource
Small Business Disillusioned with mis-sold Interest Rate Swaps
Many businesses have become disillusioned due to the compensation schemes set aside for the interest rate swap mis-selling derivatives. The Financial Services Authority has agreed to look into the cases of the mis-sold financial products of the big four banks (Barclays, Royal Bank of Scotland, Lloyds, and HSBC). There are several other banking institutions that have become involved in this Swap claims dilemma, also.
£10m Interest Rate mis-selling complaint against Lloyds by Alan Sugar
Lord Alan Sugar has sent a formal letter of complaint to Lloyds Bank for “mis-selling” of an Interest Rate hedging product. The apparent Break free sum amounts to £10m which was attached to the interest rate hedging product Lord Sugar used on his property.
The derivative was to protect against interest rate rises on a £97m Lloyds loan. Lord Sugar is undersatood to be considering legal action if the complaint is unsuccessful
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.
If you believe you have incorrectly been classified as a ‘sophisticated’ customer and have, therefore, not been eligible for interest rate swap redress. Maple Leaf Financial will review your interest rate product and we will be happy to discuss your individual concerns and requirements
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
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