The Importance of Seeking Advice following your Banks Determination on IRHP & My Disgruntlement at the Banks Refusal to Pay Customers Incurred Legal Fees .

By Nicola Paton, Senior Solicitor – Regulatory & Litigation Department​

“The FCA has confirmed that the Review process is intended to deliver fair and reasonable redress for customer without the need for assistance from legal advisors, after the customer has been invited in to the Review, and claims management companies after the date of the announcement of the Review.  Therefore such costs incurred after these points in time are generally considered unlikely to be recoverable”.  – Extract from Lloyds Bank ‘Consequential Loss – Guide for Customers’.

I am pleased to say we, at FPG, have achieved great success for those we have represented under the Interest Rate Hedging Product (IRHP) Review Scheme which has been running for over 18 months.  I do however have great concern at the banks continual refusal to meet the legal expenses incurred by their customers through the IRHP review scheme.

Since the commencement of the Review the banks have voiced their concern at the use of lawyers to assist their customers in the Review process.   I have had clients comment that that those employed by the banks have consistently discouraged them from seeking legal assistance.  Quotes such as “The Review process has been set up and approved by the FCA to deliver fair and reasonable redress to customers, where appropriate, without the need for independent advisors to be engaged” or similar text, appears throughout standardised letters issued by the banks to their customers invited on to the IRHP Review.

In the past month alone, I have had three final determination letters that have produced fantastic results for our clients, yet the background to each of these matters has caused me great alarm and immense annoyance. The banks undertook the review of the sale of the each of their customers IRHP.  In each case, which was agreed and approved by the ‘independent reviewer’, the banks offered our client some form of redress.  One client was offered £345.

FPG undertook a review of the sale and subsequently submitted written testimonies for each client which included a review of the ‘sale’ process adopted by the Bank and the Treasury representatives at the time of the IRHP sale.  We further prepared a detailed analysis of the Banks regulatory failings.  Following consideration of our written submissions each of these clients have now received substantially revised offers.    The offer referred to above, where by the Bank (and Independent Reviewer) felt it appropriate to award £345 in Redress, now accept our client should not have been sold the IRHP and they have now been offered over £200,000.

This is not an isolated case. By way of example, an offer of £67,000 was made to our client in December last year. Then, following the consideration of our firm’s written submission, this offer has this week been increased to over £349,000.  Again, this week the same bank has revised an offer of £43,000 to over £500,000 following consideration of our written submissions.

Customers which were sold IRHPs have trusted their Bank and followed their Bank’s guidance not to incur legal costs through the Review process.  I am increasingly being contacted by customers of the banks who have gone through the Review process unrepresented by lawyers.  In my opinion, unless those customers are offered full redress and the cancellation of the existing IRHP; all customers need to get advice on the determination offer issued by their Bank.

The banks need to take heed that the review process in many instances is failing their customers.  Without legal assistance those client matters referred to above may have each lost out on £100,000’s owed by the bank simply because they trusted the review to “deliver fair and reasonable redress to customers” and accepted an offer made by the Bank. 


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