The banks have sold complicated currency derivatives, such as forward plus contracts, as hedges to companies, despite simpler products being more appropriate. The contracts were highly complicated and difficult to understand.
The importance of the bank’s duty of care, and thus giving responsible financial advice upon which you, as a customer, might rely is paramount in this situation. Neglectful or untrue representations about the real nature of the product and its implications, and a fundamental failure by the bank to suitably evaluate customer’s attitude to risk are all examples we have seen at AHV.
AHV aims not just simply to value these products but to analyse the entire transaction, for example:
Was the product sold appropriate for the risks faced by the company or individual?
Were the marketing materials, including emails, accurate in their description of the risks and the proposed product?
Did the bank provide a quantitative measure of the possible risks?
Do the contractual terms reflect the agreed terms?