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.
Now, those who relied on such products to provide real value to their investment portfolios are finally able to pursue at least a limited means of recourse. The Financial Conduct Authority spent virtually all of 2012 examining the way banks did business when it involved these interest rate swaps and other sophisticated financial instrument. The organisation identified a number of key failures that led to overstated value, excessive risk borne by the average consumer and investor, and other concerns that banks are now being held accountable for.
Thousands of SWAP Evaluations are Already Underway
In light of the major failings identified by the Financial Conduct Authority in 2012, the agency established compliance reviews that were designed to look at each product, each investment, and each consumer’s risk, and the evaluate whether consumers were entitled to some form of redress or recourse as a result of the bank’s failings and its broader series of actions when using interest rate swaps.
According to numbers released by the FCA for the month of September, that month alone saw a total of 2,400 compliance-type assessments completed. A total of 1,000 investors and other consumers were invited to join this review process and a full 2,500 customers opted to join this process on their own.
As a result of this large undertaking, a full 600 compliance assessments have already been completed. So far, 400 redress determinations have been competed and issues, while 200 offer letters were sent to consumers. Out of that total of 200 offer letters, 200 have already been accepted and the total value of just those 22 offers is staggering: £1.5 million so far.
The Tip of the Iceberg: More Offers are Coming, and at a Faster Rate
If the numbers mentioned above sound rather significant, that’s because they are. But they’re about to get a lot more serious in coming months as banks prepare to send out a staggering 1,000 offers in October. Forecasts indicate that the number of offers sent out per month will continue to increase for the foreseeable future as evidence of bank failings and excessive consumer risks continue to be discovered in ongoing research.
Though the number of offers sent to consumers is expected to ramp up in the coming months, officials with the Financial Conduct Authority admit that the process is not going nearly as quickly as they would have preferred. Indeed, many banks seem to be dragging their feet or simply taking their time when evaluating each case, sending out offer letters, and processing offers accepted by consumers who received them. That’s somewhat unfortunate, but it’s generally to be expected. After all, most banks are loath to part with their funds and this is a long process that is only just beginning.
A Critical Eye Will Keep the Ball Rolling
Luckily, consumers have a strong advocate on their side in the form of the Financial Conduct Authority. The agency is already working with banks to encourage them to speed up their processing of claims, offers, and accepted offers, and expects that banks will likely kick the process into high gear in the months ahead.
Officials do caution that processing accepted offers will continue to be a slow process in many cases though, especially when it involved profits lost and other concerns that take more time to substantiate and examine. Even so, this is a major win for consumers and other entities that saw significant losses as a result of questionable interest rate swaps during the past several years.
Interest Rate SWAP Claims News
Interest Rate Swaps: Barclays Bank, Fair and Reasonable Redress
Certain interest rate hedging products (IRHPs) have come under question by current banking customers and by several banking agencies within the U.K. These banking products are structured collar financial products that are frequently used to hedge against future interest rate expenses. These complex structured collars were sold to numerous loan customers during the period of time before the great international recession. This financial downturn across the international financial markets created unusual interest rate returns for many of the structured collars sold to Barclays Bank customers.
Preparing your Business for an Interest Rate Swap Claim
The interest rate swap mis-selling fiasco has garnered a lot of attention during the past year. Over 12 months after the first cases went up for review, the claimants are just now receiving the compensation they deserve. Although it may seem like businesses around the country are now experiencing financial windfalls, there is much work that needs to be done before anyone can expect to receive compensation from their interest rate swap mis-selling claims. It has become quite clear that the process is much more involved than a PP mark-II.
Interest Rate Swaps: Natwest, Fair & Reasonable Redress
Natwest Bank in London has begun a direct redress program for those small businesses affected by several interest rate swap products. These interest rate swap products or structured collars were sold to small businesses as a hedge against any risk associated with the interest rate markets. The small businesses or unsophisticated businesses were allowed to purchase these products. The 2008 financial crisis caused many of these hedging products to be of little value against interest rate changes. Small businesses were left with a financial bill that was significantly burdensome.
Business Compensation Claims and a whole lot More
In what can only be seen as a blow to big banks and a benefit to small business owners, the Financial; Services Authority confirmed that many of the large banks in England will be required to repay small businesses compensation for mis-selling insurance products to them with their loans.
Known as Interest Rate Swap Arrangements (IRSA’s), these complicated insurance products were sold as a way for small business owners to avoid increasing interest rates on their loan products. In many cases, purchasing one of these products was required to obtain a loan.
Interest Rate SWAP Claims UK
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
Latest posts by Tim Capper (see all)
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- FCA updates PPI redress for 2.5 million old PPI complaints - October 27, 2014