In more hot water Tupungato/Shutterstock.com
Michael Brennan of Bracewell Law said the report produced by the UK’s Financial Services Authority was ‘fairly restrictive in scope’ as it only applied to businesses that have turnovers of less than £6.5 million, balance sheets of less than 3.26m or have more than 50 employees.
He added that the report primarily focussed on what the FSA considers to be ‘non-sophisticated customers’.
Question of sophistication
In relation to more sophisticated customers, Mr Brennan commented: ‘The statement says they may complain and their complaint will be dealt with in accordance with the banks’ usual complaint handling procedures and may need to consider action through the courts. So in this respect it may be that the banks are more amenable to settlement but it looks like commercial clients above the FSA fairly limited thresholds who are considered sophisticated are unlikely to be affected by this review and may still need to go to court to get a determination.’
The FSA had announced that Barclays, HSBC, Lloyds and Royal Bank of Scotland had agreed to compensate small and medium-sized businesses that were mis-sold interest rate swaps in the run-up to the financial crisis after the regulator uncovered poor sales practices.
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