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An Alternative And Safer Way To Submit A Claim For Mis-Selling Of Interest Rate Hedging Products.

Updated on August 2, 2013
IRHP Product Mis-Selling Is A Complex Matter And Requires Specialist Advice
IRHP Product Mis-Selling Is A Complex Matter And Requires Specialist Advice

There Is Another Way

We have already written, at some length, on other aspects of this topic and have always attempted to emphasis that the review process, know as the FCA Review process, is actually carried out by the banks themselves and not by the FCA/FSA.

It is clear that those who have made the sales have a preference for conducting the review in a way that strengthens their own position. It is with this in mind that most of the reviews that take place do so by means of a telephone interview between the client and the bank or their appointed legal representatives. Often, more than one such telephone interview is required.

When a pilot study was conducted it concluded that there were serious failings in the process and sales techniques used to market IRHP’s to businesses and it was further concluded that those failings could be construed as miss-selling in many cases.

Consequently, the FSA/FCA, (the FSA has been renamed the FCA), came to the conclusion that in cases where there had been miss-selling, the customer is entitled to receive “appropriate redress” from the bank in question.

Following this, the FCA has announced that an agreement has been arrived at with the relevant banks whereby they have offered to go retrospectively through their sales of IRHP products individually with the intention of providing a suitable level of compensation or redress to any customer organisation found to have been the victim of miss-selling. The customer would be assessed in order to establish their level of sophistication and redress would be made if they were identified as being non sophisticated.

The definition of “non sophisticated” however is somewhat imprecise and liable to possible misinterpretation and it was this possibility that prompted another level of assessment to be performed in order that a customer’s level of sophistication can be established and, as a consequence of that, the level of appropriate redress can be calculated.

It is our view that the method of carrying out such reviews presents certain hazards to the businesses concerned who may be engaged in the process of making a claim for miss selling of an IRHP. These hazards are amplified many times in cases where the businesses are not represented by specialists in this complex field of the law.

There Is Another Way To Make Your Submission That Could Stack The Odds In Your Favour.

If you find yourselves having to take part in one of the above mentioned telephone or face-to-face reviews, the main area of concern is that of any impromptu, ad-hoc remarks that you may make when being questioned by the representatives of the banks. You will be answering questions on circumstances and events that took place some time ago, years in some cases, and it is inevitable that the occasional “gray area” may sometimes come to the surface.

Such errors may have a serious detrimental effect on any redress that the banks may ultimately offer to you.

It is good news then that there is an alternative to the telephone or face-to-face review process that is much more favourable to the business concerned. This is the option to submit a written statement instead.

This option enables you to submit a carefully prepared and well thought out written statement. Such a statement can be researched and checked before submission and can contain a lot of detail. The statement can be used to describe the sales process that took place in a considered way with no necessity to give information on the hoof.

It is well worth considering this option, after taking specialist advice, and producing a document that contains no material that might be used by the banks in order to limit any redress that may be offered or even trying to avoid making redress at all.

Written statements should be written to include:

  • A detailed background account of your business at the time the sale was made and the relationship that you had with the bank.
  • How long you had been doing business with the bank
  • A full breakdown of the loan(s) that you took out and the repayment details.
  • An account of the process of the sale and any pre-sales conversations that may have taken place.
  • The details of the IRHP, its benefits and features as explained to you at the time
  • The likely cost of early termination, should you wish to do so.
  • Was the purchase of the IRHP made to be a necessary prerequisite to the granting of any loans?
  • Give details of your understanding of the loan, the IRHP and any related subjects as it was at the time.
  • Describe any issues that have occurred post-sale and any negative impact that may have been suffered by your business.

The Benefits of Being Legally Represented When Preparing and Submitting A Written Response

Preparing and submitting a claim for redress in such circumstances is complex and requires an understanding of all of the legal principles involved. It is necessary to utilise suitably qualified experts in the fields of law that are contained within the claim process.
Our considered advice in these cases is to go for the option of a written statement and to research and submit that statement with the assistance of suitably qualified expert advisors.
There are specialist law firms dealing with this complex area of the law and you are advised to consult with one before making a written submission.
By investing in specialist advice you can avoid many of the pitfalls described above and by choosing the written statement option you are sure to be given adequate time to reflect on events and give a full and complete version for the consideration of the banks and the courts if any further action is necessary.

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