Interest Rate Swap Mis-selling

Routes to Remedy 

There are three separate distinct routes to resolve your claim and obtain compensation.  As solicitors, we are in a position to explore and progress any of the three options and, often, will actively pursue more than one.

Your Options

You can either seek redress through the Financial Conduct Authority (‘FCA’) Review, the Financial Ombudsman Service (“FOS”) or the Courts.

FCA Review

If you are classified as “non-sophisticated” and have been sold a swap after 2001, your bank should review the sale of the swap in accordance with the FCA Review.  The non-sophistication test is based on the test for small companies under section 382 of the Companies Act 2006.  In the event that you do not meet this generic test, we still may be able to argue, on your behalf, that you should be classified as non-sophisticated. 

Being classified as “non-sophisticated” is only the beginning of several hoops to jump through in the FCA Review process.  We have found there to be substantial problems with the Review process and is heavily weighted in favour of the banks. 

The second stage involves that bank appointing reviewers who conduct a recorded interview.  The problem is that the reviewer has not had sight of any of the relevant documents, nor the customer!   The content of the recording could be used against clients at either in the Review or Court proceedings.  We advise and guide clients as to the most effective way to navigate this and every stage.

If the bank determine that the swap was mis-sold to you they will make you an offer of redress as to your “direct losses”.  Direct losses are any premium paid for the swap, the overpayment in interest and break fees.  The bank will then invite you to make submissions on consequential losses.  The bank will apply legal test such as causation and foreseeability and it is therefore crucial to have legal advice regarding this.

The downside of the FCA Review is that the process can take 12 months from start to finish.  However, with our assistance, we believe that we can cut the time down by up to 6 months. 

As a result of the lack of transparency and uncertainty in the FCA Review, it is important to seek independent legal advice in order to make the right submissions to the bank under the FCA Review but to also protect your position in relation to any Court proceedings.

Court Proceedings

Court proceedings must be issued at Court within 6 years of either the loan agreement being entered into or the date the swap was sold to you.  Even if you decide to proceed with the FCA Review, it is important to protect your position in order for the bank to have the threat of proceedings lingering over them when conducting the FCA Review.

In bringing any court proceedings it is important to ensure that nothing has been said or done in the past to prejudice your position and we will advise you regarding this to protect your position. 

Court proceedings could have the effect of bringing the bank to the table and settle the matter.  Alternatively, the bank could defend the claim to the end.  If this were to occur, it may in fact take longer to resolve than under the FCA Review.  We will advise you of the best approach, depending on your circumstances, the swap product itself and how it was sold to you.

Financial Ombudsman Service “FOS”

In our experience the FOS is a relatively slow process and can only award compensation of up to £150,000. Therefore in most cases FOS is not a desirable or advisable route by which to pursue a claim.  However, in circumstances where, for example you are classed as “sophisticated” and therefore not included in the FCA Review and your claimed is statute barred and can therefore be progressed through the Courts, FOS may be appropriate for you.

In the event that you would like to discuss any of the above, please call us on 0161 928 3848.