Has anyone here been mis-sold IRHP? (Swap)
Discussion
Since we have such an abundance of characters/businesses from all over - has anyone here had any bad experiences with interest rate hedging products? In particular being mis-sold a SWAP derivative as a condition of a commercial loan?
Seems the PPI scandal affected 1 in 3 people... whereas this SWAP mis-selling scandal affects 1 in 347 people so not such an immediate outrage publically for the Banks to immediately cough up with government intervention... instead they seem to have allowed the FSA to deal with this...HOWEVER, all FSA have done is allow the Banks to determine their own wrong doing (if any) and determine themselves what redress is appropriate...!? Its like a Rapist being allowed to determine if it was infact rape and what compensation to give to the victim...if any!? The only reason FSA are able to wipe their hands clean of this saga is that it does not affect the majority of people and as such no huge public outrage, although some good media coverage as of late (Panorama, Sky News, FT etc).
Would be interesting to hear if anyone has any comments/experiences/redress outcomes. Statistics are of all SWAPS forced to be investigated, 97% of them were found to be mis-sold which is disgraceful. If Banks were outed much the same as the PPI scandal and forced to pay out, it would infact be almost definite bankruptcy for many of the big name Banks - they seem to be doing all they can spending millions on lawyers to slow the payment of billions compensation. Government seems to take the position that for them, having to bail out 4/5 of the largest Banks to be a bigger problem they would prefer to avoid than to listen and help the many business owners screwed out of £100,000's .
Seems the PPI scandal affected 1 in 3 people... whereas this SWAP mis-selling scandal affects 1 in 347 people so not such an immediate outrage publically for the Banks to immediately cough up with government intervention... instead they seem to have allowed the FSA to deal with this...HOWEVER, all FSA have done is allow the Banks to determine their own wrong doing (if any) and determine themselves what redress is appropriate...!? Its like a Rapist being allowed to determine if it was infact rape and what compensation to give to the victim...if any!? The only reason FSA are able to wipe their hands clean of this saga is that it does not affect the majority of people and as such no huge public outrage, although some good media coverage as of late (Panorama, Sky News, FT etc).
Would be interesting to hear if anyone has any comments/experiences/redress outcomes. Statistics are of all SWAPS forced to be investigated, 97% of them were found to be mis-sold which is disgraceful. If Banks were outed much the same as the PPI scandal and forced to pay out, it would infact be almost definite bankruptcy for many of the big name Banks - they seem to be doing all they can spending millions on lawyers to slow the payment of billions compensation. Government seems to take the position that for them, having to bail out 4/5 of the largest Banks to be a bigger problem they would prefer to avoid than to listen and help the many business owners screwed out of £100,000's .
Sarnie said:
The FSA/FCA do not regulate commercial loans..........
"The Review was announced by the FCA on 29 June 2012. On 31 January 2013, the FCA indicated that it expected the Review to be completed within 6-12 months by the Banks themselves. There is a long history of Banks doing all they can to with-hold evidence/records and delay outcome leading often to private Court action to resolve".Non sophisticated customers (turnover under £10m per year, as well as few other boxes needing ticking) are wholy covered by the FCA.
Gulzar said:
"The Review was announced by the FCA on 29 June 2012. On 31 January 2013, the FCA indicated that it expected the Review to be completed within 6-12 months by the Banks themselves. There is a long history of Banks doing all they can to with-hold evidence/records and delay outcome leading often to private Court action to resolve".
Non sophisticated customers (turnover under £10m per year, as well as few other boxes needing ticking) are wholy covered by the FCA.
That doesn't mean that commercial loans are regulated by the FCA....if they were, the FCA wouldn't be 'reviewing' it they'd be enforcing it and not allowing banks to self regulate themselves....Non sophisticated customers (turnover under £10m per year, as well as few other boxes needing ticking) are wholy covered by the FCA.
Sarnie said:
That doesn't mean that commercial loans are regulated by the FCA....if they were, the FCA wouldn't be 'reviewing' it they'd be enforcing it and not allowing banks to self regulate themselves....
Their not reviewing it, infact their method of dealing with it is by instructing Banks to determine their own wrong doing and at their disrection appoint an "independant reviewer" to go over their findings. However, often this "indepedant reviewer" (who is paid and employed by the BANK) in most cases are large accountancy practices with whom the Bank has a continuing commercial relationship which the "independant reviewer" would be anxious to preserve...The clients themselves (us, the businesses) have no opportunity to put our case to the "indepedant reviewer" or have any communication with them during the whole process. The process by which the Bank and the "indepedant reviewer" eventually reach an agreement to the redress (if any) is wholly opaque and bias.
In no financial transaction or scandal in history has this been allowed to happen for the Bank to be the culprit, detective, judge and executioner. This is just too big a case for the FCA to get a hold of because it will almost certainly mean the instant bankruptcy of many high street banks with such a sudden hit to their cash flow which potentially is far greater than PPI scandal.
From: http://bully-banks.co.uk/site/bully-banks-news
In May 2013 the Financial Conduct Authority (FCA) advised the Treasury that more than 60,000 fixed interest business loans with “mark-to-market” break costs (“Hidden Swaps”) had been sold to SMEs since 2001. This is in addition to the 40,000 Interest Rate Hedging Products (“IRHPs”) the sale of which is already under review in the FCA Redress Scheme agreed with the major banks.
(Martin Wheatley, chief executive of the FCA.)
Jeremy Roe, the Chairman of the campaign group Bully-Banks, stated:
“The non-disclosure of the “mark-to-market” break costs is one of the principle reasons for the FCA Redress Scheme finding that over 95% of the sale of IRHPs were non-compliant. The same issue of non-disclosure of these break costs arises in the sale of Hidden Swaps.”
In his letter Martin Wheatley states that the FCA believes that Hidden Swaps are not regulated products and expresses concern that lenders may take advantage of a loophole in the law to continue selling the products: “There is a risk that banks may consider ‘embedding’ all their IRHPs [interest rate hedging products] into commercial loans in future, and thus avoid our regulatory oversight altogether.”
Jeremy Roe comments:
“This is not merely a concern for the future. We need to know now whether this was one of the reasons why such a large number of Hidden Swaps were sold in the past.”
Despite being written seven months ago, the letter was only released this week following a request by John Thurso MP, a member of the Treasury Select Committee, who asked the regulator to release correspondence between it and the Treasury on the issue of Hidden Swaps.
Jeremy Roe commented:
"It is clear that the FCA brought to the Treasury’s attention in May 2013 that 60,000 Hidden Swaps had been sold to SMEs. Through surveys of our members we know that the impact of those 60,000 Hidden Swaps will be the loss of over 300,000 jobs since 2008. That is in addition to the loss of over 300,000 as a result of the mis-sale of IRHPs. Given the scale of the consequences we ask the Treasury once again to immediately instruct the FCA to carry out an investigation into the sale of Hidden Swaps with a view to setting up a Redress Scheme similar to that set up for IRHPs. The Treasury’s failure to authorize such an investigation risks becoming a major political scandal.”
In May 2013 the Financial Conduct Authority (FCA) advised the Treasury that more than 60,000 fixed interest business loans with “mark-to-market” break costs (“Hidden Swaps”) had been sold to SMEs since 2001. This is in addition to the 40,000 Interest Rate Hedging Products (“IRHPs”) the sale of which is already under review in the FCA Redress Scheme agreed with the major banks.
(Martin Wheatley, chief executive of the FCA.)
Jeremy Roe, the Chairman of the campaign group Bully-Banks, stated:
“The non-disclosure of the “mark-to-market” break costs is one of the principle reasons for the FCA Redress Scheme finding that over 95% of the sale of IRHPs were non-compliant. The same issue of non-disclosure of these break costs arises in the sale of Hidden Swaps.”
In his letter Martin Wheatley states that the FCA believes that Hidden Swaps are not regulated products and expresses concern that lenders may take advantage of a loophole in the law to continue selling the products: “There is a risk that banks may consider ‘embedding’ all their IRHPs [interest rate hedging products] into commercial loans in future, and thus avoid our regulatory oversight altogether.”
Jeremy Roe comments:
“This is not merely a concern for the future. We need to know now whether this was one of the reasons why such a large number of Hidden Swaps were sold in the past.”
Despite being written seven months ago, the letter was only released this week following a request by John Thurso MP, a member of the Treasury Select Committee, who asked the regulator to release correspondence between it and the Treasury on the issue of Hidden Swaps.
Jeremy Roe commented:
"It is clear that the FCA brought to the Treasury’s attention in May 2013 that 60,000 Hidden Swaps had been sold to SMEs. Through surveys of our members we know that the impact of those 60,000 Hidden Swaps will be the loss of over 300,000 jobs since 2008. That is in addition to the loss of over 300,000 as a result of the mis-sale of IRHPs. Given the scale of the consequences we ask the Treasury once again to immediately instruct the FCA to carry out an investigation into the sale of Hidden Swaps with a view to setting up a Redress Scheme similar to that set up for IRHPs. The Treasury’s failure to authorize such an investigation risks becoming a major political scandal.”
Gulzar
I have no personal experience of entering into swaps, but I deal with a few people who have - I'm under the impression that cases are getting sorted out and quite a few have involved full tear ups and redress.
The swap/hedge isn't really the issue as far as I'm concerned, its more the nature by which the banks who sold them have used the break costs to enforce covenants and liquidation onto viable businesses and leaving them no way out.
You must have presented your case by now to an independent representative from the bank at least?
I have no personal experience of entering into swaps, but I deal with a few people who have - I'm under the impression that cases are getting sorted out and quite a few have involved full tear ups and redress.
The swap/hedge isn't really the issue as far as I'm concerned, its more the nature by which the banks who sold them have used the break costs to enforce covenants and liquidation onto viable businesses and leaving them no way out.
You must have presented your case by now to an independent representative from the bank at least?
zedstar said:
Gulzar
I have no personal experience of entering into swaps, but I deal with a few people who have - I'm under the impression that cases are getting sorted out and quite a few have involved full tear ups and redress.
The swap/hedge isn't really the issue as far as I'm concerned, its more the nature by which the banks who sold them have used the break costs to enforce covenants and liquidation onto viable businesses and leaving them no way out.
You must have presented your case by now to an independent representative from the bank at least?
Our first complaints were as far back as 2010/2011 and FCA's declaration of between 6-12 months for cases to be resolved have long passed for us... our redress could be seven figures and given our (especially my father's) lack of restraint when it comes to publically speaking or to media/newspapers, it could set quite a precident.I have no personal experience of entering into swaps, but I deal with a few people who have - I'm under the impression that cases are getting sorted out and quite a few have involved full tear ups and redress.
The swap/hedge isn't really the issue as far as I'm concerned, its more the nature by which the banks who sold them have used the break costs to enforce covenants and liquidation onto viable businesses and leaving them no way out.
You must have presented your case by now to an independent representative from the bank at least?
Personally, we are going down the route of private litigation through the Courts serving them papers, which is a huge cost. The review is an extra legal process which is entirely separate to our right to litigate through the courts given the "review's" huge delay and one sided process where the Bank decides for itself if it has done any wrongdoing and what level of compensation to give, and abides by no timeline!? - wouldnt that be fab if we could have the same powers if and when we crashed our cars into an innocent party's vehicle!?
What are you litigating for though? Redress on the IRHP or for any consequential losses?
I can guess you are talking megabucks here but howcome you didn't stall the legal process until the review is complete? I know it's taking a long time but people are starting to get offers and redress from the banks now so hopefully yours'll get sorted out too.
Good luck though and let us know how you get on....
I can guess you are talking megabucks here but howcome you didn't stall the legal process until the review is complete? I know it's taking a long time but people are starting to get offers and redress from the banks now so hopefully yours'll get sorted out too.
Good luck though and let us know how you get on....
Gassing Station | Finance | Top of Page | What's New | My Stuff