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FSA denies big firms interest rate swap complaints scheme

Natalie Ceeney

The FSA refused an offer from the Financial Ombudsman Service to create a specialist unit to deal with interest rate swap misselling claims from larger firms.

Speaking to the Parliamentary Commission on Banking Standards last week, deputy chief executive Tony Boorman said the ombudsman has been forced to turn away a lot of complaints from medium to large businesses.

FOS can only act as an adjudicator for small businesses and individuals, while larger firms are expected to settle disputes through the courts. Labour MP Andy Love raised concerns about larger firms’ access to the FOS.

Boorman said: “Any boundary of jurisdiction is a problem. The definition of micro-enterprise is not always as straightforward as one might like. We have turned away a lot of enquiries on the basis of our jurisdiction.

“The FSA looked at it and we, very proactively, offered the possibility of a particular special scheme but it concluded that it was not necessary. It thought there is a sensible boundary already and as a general principle we do not disagree.

“Large businesses should be using a court for their disputes while small business and customers at home should use an organisation like ourselves.”

In June, the regulator found “serious failings” in the way interest rate swaps were sold, prompting 10 banks to agree to review the sale of 40,000 swaps made on or after 1 December 2001.

A pilot review, conducted by HSBC, Barclays, Lloyds Banking Group and the Royal Bank of Scotland, found 90 per cent of 173 cases reviewed were missold.

Hargreaves Lansdown head of advice Danny Cox says: “If there is going to be a review that finds that banks have missold interest swap rates then the FSA should order them to repay compensation to everyone whether they are individuals or large firms.”

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