IRHPs mis-selling claims update: consequential losses
By Susanne Muth
In May 2013, nine banks agreed to review their sales to unsophisticated customers in accordance with terms of references agreed with the Financial Conduct Authority (FCA). At the end of June 2014, the FCA reported that all participating banks had completed their sales reviews in relation to customers who joined the review before March 2014. By the end of June 2014, the nine banks had sent out 16,000 redress letters, 13,500 of which included a cash redress offer and with the balance of 2,500 confirming that the sale had been compliant with the (then) Financial Services Authority (FSA) rules or that the customer had suffered no loss. By the end of June 2014, 8,000 customers had accepted their redress offers, and the banks had paid out £1.2bn.
The banks’ independent reviewers are now considering consequential loss claims. The FCA expects that process to be concluded by the end of 2014. By the end of June 2014, 2,400 customers had submitted a consequential loss claim; 600 of those claims had been assessed and the banks had paid out £1m in relation to consequential losses (over and above eight per cent simple interest per annum). That equates to an average award for consequential losses of only £1,700.
The banks are strongly resistant to paying substantial consequential losses (that is, sums exceeding the standard offer of eight per cent flat interest on refunded interest rate hedging product, or IRHP, payments). Only well-prepared and presented consequential loss claims stand any chance of compensation within the review. No5 barristers are currently acting for clients in preparing the claims for consequential losses in the review. We are also acting in the High Court for clients seeking damages for consequential losses suffered as a result of the banks’ regulatory breaches and negligence…
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