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. This has caused a large amount of frustration on the part of customers who were sold these interest rate swap deals and have suffered as a result.

Interest Rate Swaps

Initially marketed to protect borrowers from increases in interest rates, these complicated loan products have actually resulted in higher payments on the part of business owners. This is because interest rates have been at historically low levels for some time and have stayed that way. These deals, offered by four different banks between 2001 and 2008, were mis-sold to customers who had little knowledge of how floating payments worked, but who were concerned about the possibility of rising interest rates and wanted to “hedge” against them. When the Bank of England reduced interest rates in 2008, these customers found themselves responsible for dramatically increased payments. Some small business owners have faced monetary ruin because of how much these swap deals have cost them, and the delay in receiving their compensation means that they cannot begin to get their finances back in order. Some

In February 2013, the FCA ordered that all cases of interest-rate swap deals should be reviewed, as they estimated that 90% of the deals had been mis-sold to customers. Cases began to be resolved in May 2013. Progress on providing redress to these customers had been quite slow up until recently, with only 32 cases being reviewed and compensated before the release of the October 2013 figures. After October 2013, only 800 cases were resolved, falling short of a target of 1,000. The FCA has contacted these banks in order to see if the process can be accelerated. Some small business owners have been awarded hundreds of thousands of pounds in compensation after their cases have been reviewed.

The banks involved are Lloyds, Barclays, the Royal Bank of Scotland, and HSBC, and all four made a substantial profit from these swap deals. Each of the banks has agreed to pay claimants basic compensation as well as 8% interest in compensation for any financial losses that claimants have experienced. More significant losses on the part of claimants will be reviewed and resolved after initial compensation has been made for the mis-sold swap deals.

Some of the delay in processing these claims is due to operational procedures as well as independent reviews of the system for compensating claimants. The FCA has offered its help in restructuring the system in order to process claims faster. However, there are up to 25,000 businesses who could file claims for the mis-sold interest rate swap deals. This means that compensation could still take quite some time, and banks may continue to miss their targets.


Interest Rate Swap News

Dealing with Consequential Loss from Interest Rate Swaps

When will the investors who were mis-sold interest rate swaps (IRS) be compensated for their losses? The High Street banks were paid in 2008, but why aren’t the regular investors being compensated? The banks have admitted guilt. So why the slow process?

The UK has changed its primary financial regulatory agency and made new rules. In November 2013, there are promises for letters dealing with consequential loss from interest rate swaps. Here are the details and what you discover when you “read between the lines.”

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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. In a number of ways, the results were welcomed: the company found over 90 percent of sales to “non-sophisticated” customers did not comply with regulatory requirements, such as the COBS Rules. In addition, the FCA noted that most of these sales have the chance to result in redress to the customer.

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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.

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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

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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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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.