FCA IRHP Redress Scheme
Over a third of the 30,000 sales of IRHPs to SMEs are excluded from the FCA Redress Scheme even though there is no dispute that a large number of these were also mis-sold. Bully-Banks believes that the exclusion of these ‘sophisticated’ customers from the scheme is unfair and deliberate, and is a result of pressure from the banks on the FCA in order to minimise their redress bill.
We know that RBS in particular has ignored the requirements of the rules of the FCA Redress Scheme specified in the attachments to the FCA’s letter of 29th January 2013. (That failure to properly determine whether a Legitimate Condition of Lending had been established is summarized in Nick Stoop’s Report.
Although thousands of sales have been determined by the banks to have been mis-sold, very little has been paid to SMEs for the consequential losses that they incurred.
The banks are determining in thousands of cases that, although an SME suffered substantial damage to its P&L both as a direct result of the mis-sold IRHP and as a result of the additional costs that the banks were able to impose, no consequential loss was ever incurred.
The design of the review is such that it is impossible to achieve its stated aims of putting customers back into the position they would have been, had the mis-sale not occurred. Insolvency law does not allow for creditor misconduct, and the current situation actually allows the bank to benefit from their own misconduct.
Clydesdale ‘In Scope’ Review
Clydesdale Bank, including its subsidiary, Yorkshire Bank reached a voluntary agreement with the FCA to review over 2,000 sales of their Tailored Business Loans (TBLs) containing complex embedded swaps http://www.pfca.org.uk/downloads/pdf/tailored-business-loans/clydesdale-interest-rate-hedging-products-customer-communication1.pdf.