Regulator reviews bank compensation scheme
The Financial Conduct Authority has launched an investigation into the controversial redress scheme set up to compensate ‘unsophisticated’ businesses that were mis-sold complex financial products by banks. The redress scheme will be reviewed for ‘lessons learned’.
The FCA’s predecessor body, the Financial Services Authority, told SMEs with a claim that they did not need independent legal advice, even though the scheme was administered via the banks themselves.
John Swift QC will lead the review. The review ‘will provide an assessment of the former FSA and now FCA’s actions relating to their interest rate hedging product redress scheme and set out the lessons that should be learned from the review’.
The compensation scheme began in 2013. Mis-sold products included complex derivatives to ‘hedge’ against events such as interest rate rises. Many of these products were not appropriate for the businesses to which they were sold. An FSA review in 2013 found that 90% had been mis-sold.
Evidence has already been submitted by one firm of corporate treasury consultants. They have raised concerns about conflicts of interest. One example related to claims made by a KPMG whistleblower who said he was ‘browbeaten’ into making reduced settlement offers.
This review will not investigate individual claims. However, Mr Swift is writing to all parties involved with the redress scheme. Submissions can be made before 31 January 2020.
Gordon Deane at Balfour+Manson has been advising a number of the firm’s clients regarding bank related claims. If you would like to discuss any such matter with Gordon, please contact him on 0131 200 1485 or at firstname.lastname@example.org