MPs challenge FCA swap mis-selling review

Our entire team continues to work hard with various MPs (including Ministers) and Lords from all the main parties on this important issue of swap mis-selling.

On the 12th June, this issue was again debated in Westminster. Some interesting and concerning comments were made.

Note that Bill Wiggin is a former banker and cites the example of one of his constituents, who was sold a bermudan multi-callable swap by HSBC.

It should be noted that the FCA Review does not consider this product to be a ‘Category A’ redress product which is baffling, given its complexity.

Bill Wiggin MP stated, ‘I suggest that both the limitations set by the FSA fly in the face of logic and reason and wrongly exclude a number of organisations from deserved recompense. I therefore ask the Minister to require that the FCA increase the scope of the compensation fund. We should afford protection to all affected companies, regardless of their size and of which financial products they were mis-sold. Quite simply, if they were mis-sold anything, they should be entitled to the protection of the FSA review, and compensated accordingly by the FCA.’
He argued that the FCA had created its own definition of an SME, which was narrower than the Companies Act (2006) and European Commission guidelines and suggested this could have been influenced by Banks.
Vince Cable MP is reported to be ready to push the FCA to include fixed rate loans with embedded swaps into the FCA review.

Sajid Javid MP (Economic Secretary to the Treasury)

Sajid Javid argued that those outside the FCA’s review criteria were likely to have advisors or staff with the skills to advise the directors on these issues.

We find this very hard to believe, given that only derivatives experts (authorised by the then FSA) could give advice on derivatives.

Sajid stated that those not in the review are firms that have the responsibility for understanding the products they entered into.

Sajid Javid also said that the ‘floodgates’ would open if all SMEs were allowed to make claims.

Tessa Munt MP

Tessa argued that if an SME has fallen into administration, there could be a conflict of interest because the Bank has appointed the Administrator.

(This is a topic we have been working hard with various Government bodies and the FCA to resolve)

Sajid Javid agreed to discuss this with Vince Cable MP

The full record of the debate can be found here:

Westminster Debate on IRHP June 2013

Nadia Patel

Nadia has a degree in Business Management and a Diploma for Financial Advisers (Level 4). She has ten years of experience in financial services. This includes FSA regulated adviser roles in HSBC, Halifax and Nationwide. As senior manager at Vedanta Nadia is responsible for managing the office, client contact and marketing for the business.