Judicial review of FCA IRHP swaps mis-selling review scheme permitted

Holmcroft Properties Limited v KPMG (Daily Telegraph, April 25, 2015, Business 33). Holmcroft wins permission to bring a judicial review against KPMG’s conclusion that the redress offered in the redress scheme run by Barclays and reviewed by KPMG was “appropriate, fair and reasonable”.

Application for Permission to Judicially Review KPMG’s IRHP decision

On April 24, 2015, Barclays Bank (as an interested party, having mis-sold the derivatives), KPMG LLP (in their capacity as the Independent Reviewer or Skilled Person under s166 FSMA 2000) and the Financial Conduct Authority (an interested party and the Regulator) appeared at a hearing to respond to claims from Holmcroft that the compensation given to victims of mis-sold interest rate hedging products (IRHPs) has been unfair.

The claim for permission to judicially review Barclays’ KPMG-approved final redress decision was brought by Holmcroft Properties Ltd, who had been awarded around GBP 500,000 under the IRHP mis-selling compensation scheme, but not compensated for some alleged consequential and other loss. The hearing could open the way for a full judicial review of the IRHP scheme and the role of the skilled person.

JR of KPMG’s Decision as FCA Review ‘Skilled Person’ allowed

Mr Justice Parker heard the application for permission to have a judicial review and has allowed Holmcroft Properties Ltd, a nursing home operator, to bring a full judicial review after being mis-sold interest rate swaps.

Mr Justice Parker stated that KPMG, the independent reviewer of Barclays’ redress programme, could potentially be considered to be exercising the role of a public body (the FCA) by facilitating and enforcing its regulatory function and therefore KPMG could be the subject of a judicial review.

It was also indicated that the JR claim was of general public interest.

Next Steps for SMEs Mis-sold IRHPs

Directions will now be set and the claimant will seek, in the subsequent judicial review hearing, to persuade the court to make (i) an order quashing KPMG’s decision; (ii) declaratory relief from the court and (iii) costs. It is important to note that this JR, if successful, does not mean all affected SMEs will automatically obtain any enhanced redress.

Any similarly affected SMEs should obtain legal advice in respect of their own IRHP review outcome decisions immediately and certainly well within three months of the date of the final redress outcome letter (which is the time limit for seeking judicial review).

LEXLAW have conducted and settled substantially more derivatives litigation than any other law firm in England & Wales and are the leading law firm acting against banks in derivatives mis-selling claims.