December 13, 2013 - Rachel Miller
The Financial Conduct Authority (FCA) Redress Scheme for firms that have been mis-sold "swaps" investment products is failing large numbers of small firms, according to SME campaign group Bully-Banks.
The FCA has issued the fourth of its monthly reports on the implementation of the FCA Redress Scheme for the mis-sale of Interest Rate Swap Agreements (IRSAs).
It shows that of the 29,141 sales of IRSAs admitted by the banks, over 10,000 have been excluded from the Scheme by the banks on the grounds that the businesses they were mis-sold to were "big enough to know better", says Bully-Banks.
It is seventeen months since the FCA agreed with the banks that a Redress Scheme would be implemented. Of the 18,395 sales that banks have agreed to look into, only 25% (4,753 sales) have been assessed so far – and the vast majority (4,526) have been found to be a mis-sale.
However, of those assessed, the results in only 2,359 sales have been communicated to the customer. Of these, some 334 are being replaced by an alternative IRSA product by way of redress and some 211 are being maintained with either minimal or no redress at all.
Jeremy Roe, chairman of Bully-Banks, said: "The FCA's monthly report is yet another disappointing month's progress presented as a success. Our concerns continue to grow as the results are rolled out."
He added: "The inclusion of an IRSA (a wholly unsuitable product for the vast majority of SMEs) as part of the redress for a mis-sold IRSA is wholly inequitable – as is the exclusion of a third of the sales on the ground that the SME was of a size that should have enabled it to have seen through the mis-sale processes employed by the banks. It is clear that the FCA Scheme is failing large numbers of SMEs mis-sold these toxic products."