Case Study 4 – Interest Rate Hedging Products

(a) A Claimant was determined by the bank to fall outside of the FCA’s redress scheme. On closer inspection it became apparent that the bank had mis-categorised the Claimant. The bank subsequently agreed to review the IRHP.

(b) A Claimant was mis-sold an IRHP and the bank agreed to provide compensation. However, the redress offered was reduced by a replacement product. The evidence did not support the bank and following an expert report produced by AHV, the bank changed its finding thereby more than doubling the value of the redress. A number of commentators have suggested that the focus should be on the value of the replacement product, however in our experience this should be a secondary concern as more often than not there should not be a replacement product in the first place. Only after rigorous scrutiny of the evidence and understanding of the risks faced by the Claimant can a sufficiently robust argument be made to effect a change in the outcome.

(c) Whilst a Claimant was outside of the parameters of the redress scheme, nonetheless compensation was achieved because the IRHP agreement governing the transaction did not reflect the intended terms of the transaction.