It has been some time since the FSA (now FCA) announced the review of interest rate hedging products in June 2012 and as the results of the reviews are now becoming more common it is becoming clear that redress is not always what one would hope for.
In some instances the bank has rightly recognised the regulatory rules which it breached when selling the product and has offered full redress which comes in the form of a ‘tear up’ of the contract, a refund of payments made under the contract and interest. However, in many other instances the bank recognises the regulatory rules which it has breached but then goes on to say that nonetheless the customer would have entered into some kind of hedging product, often similar to the original product it was found to have mis-sold and forces the customer to enter into this replacement product.
To many this is manifestly unfair, and a bitter pill to swallow in the face of a finding of mis-sale. In truth if the bank had complied with all its regulatory rules it is often hard to see how anybody would have entered into any kind of interest rate hedging product other than a simple cap which was risk free and certain.
Worse still, the financial consequences of this swap for a swap often means that the redress under the FCA review becomes negligible.
Even those who are offered the more moderate replacement of a cap instead of a variation of their original product should be aware that this will include an element of profit for the bank, and will not be the fair market price. It is hard to see how this can be fair or reasonable.
An eye for an eye so goes the old saying but maybe when it comes to the review of mis-sold hedging contracts this should be a swap for a swap.
Slater and Gordon Lawyers can advise and assist people who have not received adequate redress, and can assist within the FCA Review or through litigation. Call our Litigation Lawyers on freephone 0800 916 9015 or contact us online and we will call you.
David Wright is a Litigation Lawyer at Slater and Gordon in London.
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