Progress on banks’ reviews of sales of interest rate hedging products has been slower than expected, the Financial Conduct Authority has stated.
The FCA announced today (7 November) that it has written to banks to make its expectations clear and agree practical ways to speed up the process of reviewing the way interest rate hedging products were sold.
Last year, Jon Green, senior associate at law firm Clarke Willmott, told FTAdviser that based on his experience of a number of claims that his firm is acting in and that he has knowledge of, banks have not yet paid out any compensation to small businesses in relation to interest rate hedging products.
Back in 2012, the FCA identified failings in the way that some banks sold interest rate hedging products.
The banks involved agreed to review their sales of interest rate hedging products made to certain customers since 2001.
The banks carried out a pilot exercise to test the review process.
The FCA reported key findings of the pilot in January 2013. The banks agreed to conduct their reviews using the approach set out in the report.
The banks and the independent reviewers were told they needed to take the time to ensure that their methods were in line with the agreed approach.
This included building robust redress models, recruiting and training staff, and writing clear communications for customers.
The full review started in May 2013.
The FCA stated: “We have also agreed with HSBC, RBS and Lloyds Banking Group that they will split payments for redress relating to the swap and consequential losses to simplify and speed up the process. We expect the number of offers to increase over the next few months.”