The Times reports that small companies who have suffered financial losses as a result of mis-selling by banks have received an average of £1,800 each through a key aspect of the official compensation scheme. The settlements are designed to cover the indirect, “lost opportunity” costs that companies experienced as a result of being sold interest-rate hedging products. The FCA said £700,000 had been paid in “consequential losses” to 400 firms who were mis-sold the products.
Source: The Times
We Say: £1,750 (not £1,800 if we’ve done our sums correctly) per ‘victim’ doesn’t sound like much to us for genuine consequential losses. The banks are offering a flat rate of 8% of the redress of the swap itself as an alternative to detailed consequential loss calculations. The 8% rate is not unattractive and for many companies that had no real plans as to what they would have done with their cash had they not been mis-sold a swap so in many cases is a perfectly reasonable offer.
The trouble is there are also numerous companies that were forced to cancel plans or projects, or forced to sell assets, to maintain working capital while they were paying the banks for the mis-sold swaps, and it is perfectly reasonable for such businesses to reclaim such consequential losses from the banks. One bank in particular is only settling the overall claim once consequential losses have been agreed which encourages (if not forces) many to accept the 8% offer rather than properly claim for consequential losses. The FCA should be forcing all the banks to settle redress for mis-sold swaps immediately if consequential loss claims cannot be finalised till a later date.
Oh, and if you’re suffered losses consequential to a mis-sold swap then you’ll need the losses to be properly valued by a suitable expert as part of your claim. We’ve provided valuation reports on numerous consequential loss claims so if you want to benefit from our expertise contact us.
