The independent reviewers are cited as being an integral part of the FCA review into interest rate hedging products. Their role is designed to provide customers with peace of mind that the review is being conducted in a fair and consistent manner and that redress decisions will be just and reasonable, based on the circumstances of a customer’s case.
The FCA has stated that the independent reviewer will:
“review all aspects of the proactive redress exercise and past business review. This will include the methodology and review of each individual case.”
This is a comprehensive undertaking and, in the circumstances, is necessary to ensure that the banks conduct their reviews in the correct manner.
The independent reviewers are billed as “the eyes and ears” of the FCA within the review process. This calls in to question why the banks have been left to select the identity of the independent reviewer for their individual review schemes. It is hard to understand how this can be deemed as fair and independent, particularly given the longstanding relationships between the banks and their chosen counterparts.
Furthermore, it is clear that the banks and the independent reviewers have an in depth relationship within the review process. Indeed, for the independent reviewer to fulfil their role, as set out by the FCA, they must have a working relationship with the banks.
It is difficult to understand, however, why a similar level of contact and insight is not granted to customers. Customers are given no insight into the work of the independent reviewer. They are not permitted access to any notes produced by the independent reviewers or details of their findings. Surely independence would be an open process, whereby the independent reviewer’s comments and findings are available for all to see, not just the bank?
Finally, we are seeing increasingly diverse sets of redress decisions coming out from bank to bank. These point to a failure of the independent reviewer and the FCA to ensure that the review process is fair and consistent across the board.
It would appear that the independent reviewers are just another box to be ticked by the banks. They provide customers with no real comfort that their cases will produce an outcome that is fair and reasonable and we are yet to see any evidence of the execution of their role.
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