Investec reports that RBS is likely to be the next bank exposed to interest rate swap claims from mis-selling and should be putting extra provisions aside for likely calls for swap compesation.

After the FCA set up the interest rate swap rate redress scheme with the banking sector, only 10 claims have been compensated so date.

RBS appears most exposed by fresh mis-selling banking scandal

RBS  is the most likely big bank to need to put aside extra provisions to compensate customers for mis-selling of interest rate swaps, reckons Cityfirm Investec.

The rate swap issue is the latest mis-selling scandal to hit the banking sector – still reeling from the PPI debacle. Such interest rate hedging products (IRHP) were designed to protect against rising interest rates but when they fell – customers were landed with a big headache and big bills.

The Financial Conduct Authority (FCA) set up a scheme to compensate victims around a year ago and today released details – showing that only half a million pounds had been paid out by the big banks in compensation so far.

Only ten cases have so far been settled at a cost of £500,000 of a total figure for provisions made by the sector of around £3bn – so around 0.016% of the potential amount has been paid out.

“Today’s update from the FCA on banks’ reviews of sales of interest rate hedging products is not conclusive, but it APPEARS to show RBS in a poor light, with 10,528 claims under review – more than Barclays (3,436), HSBC (3,309), Lloyds (2,672) and “others” (905) all taken together,” notes analyst Ian Gordon, who repeats his ‘sell’ rating and 340p price target on RBS.

In contrast with the number of claims under review, Barclays appeares to be the best provided for, having put £1.5bn aside, RBS has £0.75bn and Lloyds (£0.4bn).

However, Gordon notes that the review process into the IRHP claims is very complex. “The ultimate provisioning requirement is not a straight read-across from the number of cases. “Moreover, ALL banks could yet be exposed to fresh charges arising from “consequential loss” assessments.”

The banks have hired 2,800 staff to review the thousands of claims and the FCA expects most customers will be given a result by the end of the year.It comes on the day new figures from the independent Financial Ombusdsman show more than 266,00 PPI (payment protection insurance) claims were referred to the Ombudsman this half year – 26% more than the previous six months. These were claims that the bank either rejected or did not resolve.

Original Article :

Interest Rate Swaps: News

FCA Swap mis-selling pays out £500,000 another £2bn to go

Banks have paid out just £500,000 in compensation to businesses mis-sold swaps out of a potential bill of £2.5bn more than a year after regulators set up a redress scheme for victims of the scandal, figures published by the FCA show, reports The Telegraph.

Only 10 businesses have so far accepted compensation from their banks, though the Financial Conduct Authority (FCA) said thousands more offers would be sent out by lenders in the near future.

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Mis-sold Interest rate swap business recieves payout

The interest rate swap scandal has been one of the bigger scandals of the British financial systems, with many large banks such as Barclays and Lloyds ordered to compensate victims of the mis-selling of interest rate swaps. Interest rate swaps are essentially the exchange between counterparties of a fixed interest rate with a floating one. They are used primarily in businesses as a hedge against changes in the interest rate. However, an unforeseen consequence of these products were substantial losses due to falling interest rates, something that regulators believe buyers of the product were not properly informed about. Despite being ordered to issue compensation to victims of the mis-selling over a year ago by financial regulators, banks have only recently made the first payment towards victims of the mis-selling scandal.

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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.