After concerns raised by the British press, The FSA recently declared its investigation has yielded â€˜serious failingsâ€™ in the way HSBC has marketed its interest rate hedging products. Consequently, the bank has agreed to compensate
Online PR News – 03-January-2013 – London – After concerns raised by the British press, The FSA recently declared its investigation has yielded â€˜serious failingsâ€™ in the way HSBC has marketed its interest rate hedging products. Consequently, the bank has agreed to compensate its small and medium-sized business clients for HSBC interest rate swap mis-selling. Joining HSBC are Barclays, Lloyds and Royal Bank of Scotland.
HSBC has stopped the sale of interest rate hedges and has agree to pay compensation to thousands of clients, which has left some of their clients with extortionate costs that the bank failed to warn them about when they were sold the product. As a result, these customers have been victims of HSBC interest rate swap mis-selling and are entitled to appropriate redress, in the same way members of the public have been claiming compensation for mis-sold payment protection insurance (PPI).
The head of HSBC, Mr Brian Robertson, has promised not to repossess businesses that have made a complaint about HSBC interest rate swap mis-selling and have a valid claim. It is estimated that over 28,000 businesses have been sold interest rate hedges by the four banks. This latest figure suggests that the true cost of HSBC interest rate swap mis-selling scandal, and its fellow major lenders, could be a lot higher that currently estimated by the FSA and the banks themselves.
HSBC has publically welcomed the exposure of HSBCâ€™s interest rate swap mis-sellling, possibly due to their incentivised, and so potentially over-zealous, sales agents. Consequently, the bank is moving quickly to pay compensation to its customers who have been adversely affected by HSBCâ€™s interest rate swap mis-selling.
At present, the bank can only estimate what will be the eventual cost of HSBCâ€™s interest rate swap mis-selling; however, HSBC, Barclays and the Royal Bank of Scotland have set aside Â£630 million between them in preparation for the compensation they may have to pay under the FSA compensation scheme, which they joined in June of this year.
However, some financial experts have predicted the interest rate swap
mis-selling scandal could cost the banks more than Â£10 billion in compensation. It is believed such cases of HSBC interest rate swap mis-selling and its neighbouring lenders will amount to significantly great compensation payments, when compared to the recent PPI debacle.
This could just be the tip of the iceberg when it comes to the mis-selling of financial products. As the FSA digs deeper into exactly how banks market and sell insurance products to their individual and business customers, there are whispers that new evidence of even greater mis-selling could be exposed to the general public, should the regulators choose to investigate fixed-rate business loans that have derivative contracts â€˜hiddenâ€™ within them, resulting in clients suffering large break costs that they were never made aware of at the time of being sold the product.
At Stellar Law, we have discovered that in numerous cases, our clients have been mi-sold interest rate hedge products by HSBC; consequently, the bank has significantly failed in its duty of care to its customers. It is on this basis, our lead council and barristers feel the client most definitely has a claim regarding HSBCâ€™s interest rate swap mis-selling.
If you are a client of HSBC and suspect you may have a claim, or for more information about HSBCâ€™s interest rate swap mis-selling, please do not hesitate to contact Stellar Law today on 0800 774 7400.