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FCA Swaps review update – consequential losses
Still only 22 settlements during September out of a possible 29,000. Many customers are reluctant to accept an offer that ignores the long term damage the swap has done to their business.
If a bank accepts that a swap has been mis-sold, it will suspend the swap and put on hold the collection of any future payments under the swap. The bank will offer ‘basic redress’ i.e. the difference between the cost of the mis-sold swap and an alternative product and/ or break costs. This does not include consequential losses.
Only one offer will be made with no further negotiation.
What may later be offered, if anything, for consequential losses is unclear. The FCA’s guidance states that 8% simple interest on basic redress should be enough. Customers may disagree.
If the customer rejects an offer, the swap will be reinstated and the suspension on payments lifted. The customer will then be liable for both the backlog of suspended payments, ongoing payments and break costs. Many will not be able to afford this and may be compelled to accept an inadequate offer. However if they are not time barred and so still have the right to sue, there will be some prospect of keeping the swap on-hold either by agreement or by order of the court.
It is therefore well worth keeping all your options open in case the review offer is unsatisfactory. We can help customers negotiate directly with the bank via the pre action protocol that does include consequential losses and get a standstill agreement in place while still aiming to avoid court action.