McHale & Co. Solicitors Blog

Interest Rate Swaps-latest news!

We attended a meeting yesterday with Lloyds Bank. The bank reviewer (BR)   had come up with a redress offer for our client which amounted to alternative product redress which was of no real benefit to the client. The meeting yesterday was our opportunity to ask the IR how he had come to such a (frankly silly) decision. Coming out of this conversation were a number of interesting facts that are of wider relevance to all those fighting against the banks and so I wish to share them here:

  • ·         Different standards are applied to different types of customers who have all been deemed “non-sophisticated”. We were advised that the banks and the FCA have effectively set levels of “non-sophisticated”. Professional property business are deemed by the bank and the FCA to understand more about long term interest rate exposure and are therefore deemed to be less non-sophisticated. This “banding” is something that the FCA or banks have not made us aware of previously.
  • ·         The FCA sets acceptable limits for potential break fees. Therefore if the potential break fees were below those limits, it is irrelevant what the customer was or was not told about break fees at the time of the sale. That is regardless of their level of understanding or non-sophistication. Incredible but true!
  • ·         Lloyds withhold documents from customers during the review process, which have been considered as part of the review process by the bank and the IR. They admitted that they based decisions on documents that they had not shown us despite requests. The manifest unfairness of this is quite incredible.
  • ·         If there is no document/evidence on a particular issue, the bank will make bare assumptions as it sees fit. So for eg, where a client is only offered Collars and not Caps (that may have had a premium at the outset), the BR presumes that the client was not prepared to pay a premium despite there being no evidence whatsoever that this is the case.
  • ·         Lloyds accepted that the customer did not want one of the alternative products offered to it at the time of the sale, but then give the customer the same unwanted product as the alternative product redress! How can this put them in the position that they would have been in, if (as accepted by the bank) the customer did/would not have entered into that hedging arrangement at the time?
  • ·         Lloyds bank expressly said that their staff was not incentivised at all to sell these products! (ironically this meeting was taking place as news of Lloyd’s record breaking FCA fine for such actions was breaking so make up your own mind)

Besides the above what was clear was that the BR felt that the bank had done nothing wrong. It seemed to us that he felt his role was to defend the bank and not to truly look for appropriate redress. In addition, some of the (wrong) assumptions that led to this poor decision in this case were at least based on the experience of the BR having sold these products himself (That’s right: they are asking the poachers to act as gamekeepers-you couldn’t make it up as they say). The position of the “Independent Reviewer” (IR) is quite incredible here. Apparently they looked at the information independently and came to the same conclusion, based on the same (wrong) assumptions, this despite the fact that the IR was not involved ever in the sale of IRHP and had no grounds for making the same assumptions. We are now writing directly to the IR to get them to justify their position and will be raising the issue with the FCA.

All this being said we thing that the weight of the submissions we will now lodge will get the bank to change from their untenable position. I guess the question is how many unrepresented customers will they put off from fighting on?

Quick Version

The banks are still covering their tracks and the Independent reviewers are as useful as chocolate teapots.

Categories: Interest Rate Swaps
Posted by Jon Marsden on
I am one of your Barclays clients, I hope they treat me as a Hotelier/Professional pilot and not a property developer, although I have improved some of my sites and then sold them on!
Posted by Satvir Sidhu on
It is absolutely ridiculas.

They are leading everyone around the maze until people get tired and give up there rightful claims as set by FCA,who are also allowing them to change as the process is moving forward.

We poor people do noy have the money to fight long legal battles with banks and they know that too.

They just know that number of cases will dye their own death, if they are made to bled in this way.

How can we keep on fighting such an battle?
Posted by Andrew on
Dear Satvir Sidhu,

Have you been a victim of this scandal?

Kind regards,


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