June 20, 2014
A survey by campaign group Bully-Banks has found that the Redress Scheme for firms that have been mis-sold Interest Rate Hedging Products (IRHPs) is failing small businesses.
It found that 51% of RBS customers have not yet been informed of the bank's decision in their case. And 35% of all SMEs mis-sold IRHPs have been excluded from the Redress Scheme on the grounds that they are "sophisticated customers" who should have known what they were agreeing to.
The survey has found that of those SMEs with IRHPs to a value of less than £249K, 88% have had their products torn up with no alternative product imposed upon them, and 12% have had their products torn up with a cap imposed upon them.
Of those SMEs with IRHPs to a value of more than £5 million, only 28.5% have a full tear up with no alternative product imposed upon them, while 43% have had their products torn up with a cap imposed upon them. In addition, 28.5% have had their products torn up but have an alternative Swap imposed upon them.
Bully-Banks said that the value of the IRHP should have no bearing on the decision as to appropriate redress.
In its latest monthly report, the FCA says that thousands of SME have "accepted" 8% as a "fair alternative" to putting a claim for consequential loss together. Of those customers who have accepted that, Bully-Banks finds that 49% are unhappy with this level of payment.
Jeremy Roe, chairman of Bully-Banks said: "It must now be apparent to everyone that the FCA Redress Scheme is failing to deliver fair redress to thousands of small businesses. Banks mis-sold a financial product that brought thousands of small businesses to their knees. The amount of consequential loss being paid by the banks is so derisory that it is clear to everyone that the banks have not changed their behaviour at all."