FSA Findings

The Financial Services Authority (FSA now FCA) has confirmed Barclays, HSBC, Lloyds and RBS must undertake a full review of the sales of interest rate swaps to small and medium sized businesses (SMEs).

The FSA first discovered serious failings in the sales practice of interest rate swaps back in June 2012. Its latest announcement means these four major lenders have agreed to review individual sales and provide financial damages where applicable.

The FSA pilot scheme found that over 90% of the sales failed to meet at least one regulatory requirement. However while a significant proportion of the pilot could likely result in redress, there has been a reluctance to provide transparency surrounding the amounts to be refunded to the pilot participants or what in fact constitutes "fair and reasonable" redress.

There also remains little clarity in regards to timeframes with the announcement failing to put any deadlines in place. This is of particular concern for clients approaching their limitation expiry date, leaving them at the mercy of their lender.

Such ambiguity means now is the time for SMEs to seek specialist legal advice in order to secure compensation which adequately addresses the damage this mis selling scandal has had. Businesses who do not obtain legal representation may,as a result, be forced to accept any offer of redress regardless of fairness.