The Financial Conduct Authority (FCA), previously the Financial Services Authority (FSA) has created a set of questions and answers to determine whether a customer who was sold an interest rate swap product qualifies as “non-sophisticated” and therefore eligible to make an interest rate swap claim.

Please Note: If you feel that you fall within some of the questions, please do not hesitate to contact Maple Leaf Financial for a No Obligation chat.

Do I Qualify as “non-sophisticated”

First Question

Did the customer purchase a derivative (separate from a loan) that had the function of protecting against interest rate fluctuations? There are two requirements here :

1) the derivative must have been a separate product and

2) it must have been used to hedge interest rates.

– No

If the answer is “No,” then the product cannot be reviewed by the FCA.

– Yes

If the answer is “Yes,” then the person can continue to the Second Question.

Second Question

Was the Interest Rate Hedging Product (IRHP) sold on or after 1 December 2001?

– No

No review.

– Yes

Continue to Third Question.

Third Question

This question has two branches, one for a “private customer” and one for a “retail client”.

+ Was the buyer a “private customer” purchasing the derivative on or before 31 October 2007?

+ Was the buyer a “retail client” purchasing the derivative on or after November 1, 2007?

– No

No review.

– Yes to either question, then continue to Fourth Question.

Fourth Question is “Sophistication Test”

Did the customer have the requisite knowledge and sophistication to understand the risk of the derivative?

– Yes

No review.

There is also a disclaimer suggesting that if the party does not qualify, he or she could seek legal representation.

– No

Continue to Fifth Question.

Fifth Question

Three thresholds (or criteria) are listed for a small group or company:

1) Turnover of more than £6.5 million net

2) Balance sheet total of more than £3.26 million

3) More than 50 employees

Does the customer meet at least the first criteria and the second or third criteria?

– Yes

No review.

– No

Continue to Sixth Question.

Sixth Question

Is customer part of a group of Connected Clients [single risk classification] with an aggregate notional value of the IRHP as more than £10 million?

– Yes

No review.

– No

This customer qualifies as non-sophisticated and has a case that can be reviewed by the FCA.


Maple Financial Interest Rate Swap Claims

We have a specialist team of solicitors dedicated to dealing with the mis-selling of interest rate swap protection products by the banks. We are very happy to review these relatively complex 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 redress.  Maple Leaf Financial will review your interest rate product and we will be happy to discuss your individual concerns and requirements : 0800 7747624



We have also provided the flowchart provided by the FCA for you to follow.


Interest Rate Swap – “non-sophisticated” customer



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.