Speak Now or Forever Hold Your Peace: The Fast Approaching Deadline to Have Your IRHP Reviewed.

By Nicola Paton– Senior Solicitor

The Financial Conduct Authority (“FCA”) has recently announced the deadline for acceptance onto the Interest Rate Hedging Product (“IRHP”) Review.  The deadline to accept your banks offer to have the review of your IRHP is 31st MARCH 2015.

This gives you just over 6 weeks to submit your authority to your bank requesting the sale of your swap or collar to be reviewed.

The full review started in May 2013 and the FCA states that the banks have now sent a redress determination letter to all of the 17,000 businesses that are in the review. So far, £1.8 billion has been paid in redress, including £365 million to deal with consequential losses. Invitations have been sent to bank customers, the vast majority of those have been taken up and the reviews have now been finalised or are nearing the end of the review process.

I strongly urge everyone who obtained a loan with a bank, between 2001 to date (particularly 2004 to 2008) and whom was possibly approached by their Relationship Manager to discuss concerns over meeting loan repayment if interest rates were to rise, to contact their bank immediately and enquire if you have an IRHP.

I have many clients who were simply not aware they had such a hedging product; many were of the belief that the discussions with their relationship manager and the ‘charming man’ from the Treasury were to provide information in relation to forecasted interest rate movements.   The reality was this was a sales meeting.

A client recently commented to me that had he known he was meeting with the ‘marketing department’ he would never have taken the information provided as verbatim, he would have sought independent advice and definitely made more enquires about the product on offer.

Many businesses were not aware of the existence of these IRHPs, particularly a Cap.  You should be aware that if you were sold a Cap your bank will NOT have written to you inviting you to have the sale of the Cap reviewed under the FCA Scheme.  The burden is on the customer to issue a complaint to the bank and the bank will thereafter agree to review the sale process. It is vital you identify if you were sold a Cap and raise a complaint by the 31st March 2015 otherwise you will lose your right to have it reviewed.  Many customers may not be aware they were sold a Cap; a Cap attracts a premium which can be paid at the commencement of the start (or through the term) of the products life.   I have personally seen Cap premiums to be in the hundreds of thousands of pounds.   If your bank failed you as a customer when selling the IRHP, you may be entitled to have this premium refunded. If you are unsure on what steps to take now, or have any questions in relation to IRHP’s, please do not hesitate to contact us.


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