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MPs demand powers to extend interest rate swap misselling redress

MPs are calling for the FCA to be given the power to launch a redress programme for those who were missold embedded interest rate swaps.

The FSA began a full review of interest rate swaps in January.

However, the redress scheme only covers swaps sold as an independent product, and not swaps which were embedded in business loans.

The FCA says embedded swaps are excluded because they are classified as commercial loans and are therefore unregulated.

A spokesman for the FCA says swaps sold independently are a “separate derivative” whereas embedded swaps are an “integral part of the loan”.

But Treasury select committee member John Thurso, a Liberal Democrat MP, says there is no reason why a redress programme should not be set up for embedded swaps.

He has tabled an early day motion – signed by 18 MPs so far – calling for a review and for redress to be paid to those affected by embedded swap misselling.

Speaking to Money Marketing, Thurso says: “The FCA has helpfully pointed out to me that it is not, in its view, legally empowered to undertake a review on embedded swaps.

“It is over to us in Parliament to ensure we either give the FCA the power to do it or instruct someone else who can.”

Capital Asset Management chief executive Alan Smith says: “While there must be some form of redress for victims of misselling, a line has to be drawn somewhere between what is regulated and what is not.”

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