From the outset we just trusted Lee implicitly. We knew he was the right man for case.
The eagerly awaited SRA report on Interest Rate Swap mis-selling is published
At seven o’clock this morning (30 January 2013) - a day earlier than anticipated - the FSA released a statement following its investigation into interest rate swaps.
For small businesses who have been affected by this scandal, the statement looks hopeful but gives worrying statistics as to how big this scandal actually is. Accusing lenders of selling businesses “absurdly complex products”, the FSA statement confirms that of the 173 IRS sales to SME’s that they investigated, more than 90% were found to have been mis-sold.
Despite the bad news in December 2012 with the decision of Green & Rowley –v- RBS which seemed to ring the death knell for a positive outcome for SME’s, the FSA roundly dismissed that case as being too fact specific, a point that we made in our article about the claim on 9th January
As a result of this finding, the Big Four banks (Barclays, Lloyds TSB, HSBC & RBS) have now been given the go-ahead to review their mis-selling – Allied Irish, Bank of Ireland, Clydesdale/Yorkshire Co-operative and Santander will hear in the next couple of weeks whether they will be obliged to carry out the reviews.
At this moment in time though, it is unclear whether this relates to all IRS sales (including vanilla hedges) or, as previously suggested, is limited to purely structured IRS Sales.
Further, clarification has not been given as to what type of SME is subject to the review: previously the FSA had stipulated that only those businesses with less than 50 employees, turnover of no more than £6.5m and a balance sheet total of less than £3.26m would be subject to the review. It appears that these restrictions currently still stand despite criticism by many lobby groups who suggest that these restrictions are artificial and fail to take into account the realities of the situation.
Further good news appears to come from the FSA statement though in its confirmation that these reviews will provide “fair and reasonable redress” to those affected. This does appear positive but, bearing in mind the recent reports of bank pressure on the FSA to water down the levels of compensation, it is unsurprising that lobby groups such as Bully Banks consider this a ‘Polo’ settlement: “it has a fundamental hole in the middle with no definition of what is ‘fair and reasonable’, what actual redress businesses will receive nor any deadline for resolution”.
So whilst the statement appears positive in that the Big Four banks are going to have to review their selling of IRS, it is still far from clear as to who will come within the remit of those reviews and how much compensation will actually be provided. In addition, this is very much ‘early days’ for this latest scandal to hit the banks and so whilst this ‘Polo’ report seems initially positive, there will undoubtedly be a number of humps in the road before a totally successful outcome.