FCA Quarterly Report on the Interest Rate Hedging Product Redress Scheme…
The FCA have today issued their Quarterly Report on the Redress Scheme.
The principal issue evidenced by the Quarterly Report is the total failure of the Redress Scheme to provide any Consequential Loss to those SMEs damaged by the misconduct of their bank.
The Report states that, as of the end of September 2014, only 1,532 Consequential Loss claims have been determined.
Of those 1,532 determinations by the banks:
- 871 (i.e. 56% of the Consequential Loss claims determined) result in no Consequential Loss being paid;
- 502 (i.e. 32% of the Consequential Loss claims determined) result in less than £10,000 Consequential Loss being paid.
That means that some 88% of the Consequential Loss claims determined so far have resulted in minimal Consequential Loss being paid.
Over £1.5 billion of basic redress has been paid out (i.e. nearly £1.5 billion of money taken from SMEs as the result of the banks’ misconduct has now been returned to them). In addition at least £1.5 billion of additional liability under the IRHPs has been cancelled by the banks. That means that over £3 billion of “cost” has been returned to or removed from SMEs.
Jeremy Roe, Chairman of Bully-Banks, comments:
“It is beyond reason to argue (as the FCA does) that the Consequential Loss suffered by these businesses as the result of the imposition of £3 billion of cost is being adequately dealt with by the Redress Scheme when such minimal levels of Consequential Loss are being determined to be payable.
If you remove the 8% interest (which is stated by the FCA to be simple interest on monies improperly charged by the banks NOT Consequential Loss) the total Consequential Loss paid out under the Redress Scheme to date is only £5 million i.e. an average Consequential Loss payment of just £3.200.
We have all become inured to scandal after scandal in the banking world. Here is yet another. In its own right, the failure of the FCA’s Redress Scheme to properly deal with the issue of Consequential Loss is a standalone scandal. It is a disgrace.
The minimal levels of Consequential Loss being determined by the banks is wholly contrary to the FCA’s claim that the objective of the Redress Scheme, to which the banks have subscribed, is to return businesses to the position they would have been in had they not been mis-sold an IRHP.”
The FCA’s Quarterly Report is available at:
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