Category: IRHP Reviews

FCA IRHP Review - KPMG whistleblower: RBS fought to reduce size of interest rate swap redress

FCA IRHP Review – KPMG whistleblower: RBS fought to reduce size of interest rate swap redress

A KPMG whistleblower revealed that RBS pressured the FCA Interest Rate Hedging Product (IRHP) redress scheme to reduce compensation payouts, often challenging claims over £750,000. RBS preferred offering alternative products rather than cash refunds and frequently argued sales were compliant to avoid redress. The FCA’s review was criticised for lacking independence, allowing banks to self-assess wrongdoing, causing unfair delays and rejections of consequential loss claims. Many SMEs have been short-changed due to these flaws, highlighting the need for urgent legal advice and challenge of unfair redress offers.

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Fixed Rate Tailored Business Loan Mis-selling: Clydesdale & Yorkshire Bank’s Internal TBL Review

Clydesdale and Yorkshire Banks have now begun a review of past sales of fixed rate loans often sold as Tailored Business Loans (TBLs). These are Fixed Rate Loan wrapper products with embedded derivatives.

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HMRC Advice for the tax treatment of Interest Rate Hedging Products (IRHP Review) redress payments

HMRC has issued tax advice leaflets for banks to hand to customers receiving redress from mis-sold Interest Rate Hedging Products (IRHP), urging correct tax return reporting. Affected banks must review sales since 2001 under FCA supervision, leading to customer compensation. Redress payments, consisting of basic redress, 8% compensatory interest, and consequential losses, are generally taxable income or subject to capital gains tax. Individuals should account for tax deducted from interest. HMRC recommends consulting an accountant for complex scenarios.

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Barclays’ attempt to strike-out swaps mis-selling claim (on limitation defence) dismissed by High Court

The High Court dismissed Barclays’ attempt to strike out a swaps mis-selling claim as time-barred under the six-year limitation period. The claimant relied on section 14A of the Limitation Act 1980, which extends the limitation period by three years from when the claimant knew or ought to have known the relevant facts. The court held there was a real prospect that the claimant did not know enough to investigate the claim until later, rejecting Barclays’ argument that earlier interest payments triggered the limitation clock. This ruling supports claimants in overcoming time-bar defences in swaps cases.

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Interest Rate Swaps Mis-selling: FCA Publishes IRHP Review Statistics

The FCA’s update on the IRHP mis-selling review reveals severe delays, with only 10 final redress offers accepted out of over 30,000 cases after 14 months. RBS, with the largest review population, lags behind, still classifying many customers. Only 2% of sales have completed compliance assessment, with 93% found non-compliant.

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‘FCA Swaps Review’ Update: Comment on Bank IRHP Review Delays with Statistics from the FCA

The FCA Swaps Review has faced significant delays since beginning in April 2013, frustrating many affected businesses. Latest FCA data reveals that only 50% of sophistication assessments are complete, 3.9% of cases have reached interviews, and 2.6% have had payments suspended. Delays risk customers losing legal rights due to the six-year limitation period. Concerns exist over banks bypassing the sophistication stage while fairness issues arise over banks self-assessing their mis-selling.

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‘FCA Review’ of Interest Rate Hedging (IRHP) Sales: Written Statement or ‘Fact Find’ Interview?

The FCA/FSA Hedging Review is conducted by the banks, not the regulator, and involves recorded interviews or fact-find meetings with customers. These interviews can be one-sided, with the bank’s lawyers asking questions designed to limit compensation. Customers often have limited rights to access bank records or challenge questions. A written statement, prepared with legal guidance, can be a safer way to present the sales experience without the risks of interviews.

The Parliamentary Commission on Banking Standards’ Final Report calls for radical reforms to restore banking trust, addressing LIBOR manipulation and derivatives mis-selling. Key proposals include criminal liability for reckless bankers, improved governance, stronger regulator duties, and wider access to the Financial Ombudsman Service for small businesses. The report also urges greater financial literacy, transparency, and regulation to prevent banks from disclaiming advisory responsibility when selling complex products like interest rate swaps. Lexlaw supports clients affected by such mis-selling and advocates for fairer banking practices. Contact Lexlaw for expert legal advice and representation.

The Banking Commission’s Proposals relevant to Swaps Mis-selling

The Parliamentary Commission on Banking Standards’ Final Report calls for radical reforms to restore banking trust, addressing LIBOR manipulation and derivatives mis-selling. Key proposals include criminal liability for reckless bankers, improved governance, stronger regulator duties, and wider access to the Financial Ombudsman Service for small businesses. The report urges greater financial literacy, transparency, and regulation to prevent banks from disclaiming advisory responsibility when selling complex products.

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The Times: Banks’ secretly settling swaps mis-selling cases

The Times Newspaper reports that banks are secretly settling swaps mis-selling cases with small businesses, often on the eve of court proceedings. These settlements are kept confidential, and the banks often make public statements denying wrongdoing. The number of claims is increasing as businesses become aware of the issue. Businesses argue that the swaps were too complex and that banks failed to explain the risks involved.

The FSA’s definition of sophistication for swaps mis-selling reviews is complex and has caused confusion due to inconsistent communications. The original test deems a business sophisticated if it meets two of three criteria: turnover above £6.5m, balance sheet over £3.26m, or more than 50 employees. A new £10 million test modifies this for certain businesses, affecting their inclusion in the review. Clarification is expected from the FSA. Lexlaw offers expert advice to help businesses understand and navigate these rules. Contact Lexlaw for assistance with swaps claims.

What is Sophistication in the FSA Swaps Mis-selling Scheme?

The FSA’s definition of sophistication for swaps mis-selling reviews is complex and has caused confusion. The original test deems a business sophisticated if it meets two of three criteria: turnover above £6.5m, balance sheet over £3.26m, or more than 50 employees. A new £10 million test modifies this excluding them from the FSA review.