The FSA started their investigation into interest rate swap mis-selling after Vedanta Hedging initiated an investigation through the Telegraph. This is what the FSA refers to in section 6 on their update below as the ‘specific programme of work in mid-March’.
We have also been working with and advising the FSA about this complex issue since we are FSA Authorised ourselves, to advise on derivatives.
The FSA has just released some more information on its website about this:
As ever, we continue to highlight that the complexities of these products and the issues around the selling of them, mean that there are many potential reasons that SME’s may not actually get the compensation / redress from Banks that they are expecting.
Interestingly, the update states that sophisticated customers may be able to raise their complaint with the FOS. We cannot see how this is possible, since by the very definition of these criteria, the SME will exceed the FOS eligibility criteria!
The update also says that if a business has gone into administration since 2001, the FSA expects the Bank to contact the administratros to discuss what fair redress may be. This is in itself raises many obvious questions and complications.
The update also talks about dissolved companies potentially being ‘restored’ in order to be part of this process.
Much of the detail in this update will be scrutinised by credible solicitor firms, and we will continue to work with and advise the leading solicitor firms in the country about this issue. This update raises at least a dozen questions in our mind already having quickly read it.
The over-arching point remains, no matter how much detail is provided by the FSA, where an SME has been mis-sold a hedging product it is unlikely that an SME will be able to obtain the true amount of appropriate redress, without seeking professional hedging expertise and a credible solicitor firm.