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Progress Report on FCA Swap Mis-Selling Review

The Financial Conduct Authority (FCA) has just published their latest update on the banks’ review of sales of “interest rate hedging products”. The results are more positive than had been expected. The FCA’s view is that the banks “remain on track to provide a redress determination to all customers within 12 months of starting their reviews”.  The latest figures published by the FCA show that the pace of the banks’ reviews is continuing to increase. 
The scale of the review is substantial. This is particularly the case with Royal Bank of Scotland. It currently has 9,194 cases in the review, but only 2,894 in the redress phase. By comparison, Lloyds has made substantial progress with 1,084 of its 1,771 cases in the final redress stage. 
The size of the exercise can also be seen from the numbers of personnel involved. The banks and independent reviewers have employed 2,800 people to review cases.  The FCA understand that these personnel have to date collated and reviewed in excess of 5million documents. 
Sadly none of this progress will be of any comfort to those SME customers who were sold commercial loans with “embedded swaps”. These customers, in particular, customers of Clydesdale Bank/Yorkshire Bank who took out “Tailored Business Loans” remain for the time being outside the scope of the FCA Independent Review. There are also more than 10,500 companies that have been excluded from the Review as “sophisticated customers”. For these excluded classes, the only redress currently available amounts to a complaint to the Financial Ombudsman Service (with any compensation payment capped at £150,000) or legal action through the Courts. 
Balfour+Manson are acting for a number of SME clients who are currently involved in the Review. We are also advising a number of clients in relation to “embedded swaps” and “Tailored Business Loans”. 
If you need further information or advice, please contact Gordon Deane on 0131 200 1485.

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