Hundreds of small businesses are preparing to launch a judicial review against the FCA because it failed to provide “fair and reasonable” redress for those who were mis-sold a toxic financial product.
The businesses, represented by campaigning group Bully-Banks, with legal support from Slater and Gordon, all sought redress under the FCA’s scheme after they were mis-sold an IRHP.
The scheme commenced in June 2012 and is ongoing. Nearly 30,000 Interest Rate Hedging Products were mis-sold to SMEs and after almost three years only 11,000 customers in the review have accepted redress, with many only accepting redress under pressure from their bank to do so. Thousands of SMEs are still considering or are unsatisfied with the offers made and many thousands have been excluded from the scheme.
Bully-Banks’ Chairman Jeremy Roe said: “We feel we have no other option but to seek a judicial review into the FCA’s conduct around these matters.
“The FCA has not met their obligations as a regulator and has failed to implement a workable redress scheme.
“The redress scheme put in place by the FCA is failing to remedy the damage caused by these toxic products, which have left thousands of small business owners crippled.
“Significant misconduct by the banks occurred and great harm resulted to thousands of small and medium sized businesses throughout the country. Bully-Banks is calling on all businesses sold these products to join us as we challenge the FCA’s conduct on this matter.”
Fraser Whitehead, head of Business and Specialist Litigation at Slater and Gordon said: “It’s wrong that small and medium sized businesses have been subjected to a substandard and unfair redress scheme. That’s why we have written to the FCA asking them to put right the failings in their scheme.
“Not only did these business owners suffer because of the financial product they were sold by the banks, they are now continuing to suffer because the FCA did not deliver what they said it would. The scheme was unfair and could be manipulated to the banks’ advantage.
“The grounds of the judicial review will include failure to provide appropriate supervision, inconsistency of outcomes and lack of transparency.
“The sad fact of the matter is that the FCA scheme failed to provide businesses with an opportunity to obtain meaningful redress and its objective of delivering consumer protection has been undermined.
“We look forward to helping these small and medium business owners get the justice they deserve which is a fairer and more transparent process and a re-examination of cases of injustice.”
Unless the FCA rectify the defects in the current scheme the judicial review is expected to commence next month. If successful, the FCA will need to reconsider the way in which its scheme has been conducted and implement a new fairer process for redress.
Slater and Gordon Lawyers have more than 1,450 staff and offices in London, Manchester, Liverpool, Birmingham, Sheffield, Milton Keynes, Bristol, Derby, Merseyside, Cambridge, Edinburgh, Cardiff, Halifax, Newcastle, Wakefield and meeting rooms in Bramhall, Cheshire and in Hull, Yorkshire.