These steps summarise how IRHP sales will be reviewed. Independent reviewers will provide oversight of every case.
In June 2019 the FCA Board commissioned an Independent Review of the FSA, and subsequently the FCA’s, supervisory intervention on Interest Rate Hedging Products. On 14 December 2021 we published the Independent Reviewer’s report and the FCA’s response to its recommendations[1].
Start
- Sales of those products and to those customers covered by the review are divided into 3 categories: structured collars (category A); caps (category C); and all other standalone IRHPs (category B).
- Category C sales will be included in the review only if customers proactively complain (this is because category C products are the least complex and are less likely to have caused consumer detriment).
- Find out more about who is eligible for the review[2], the sales covered by the review[3], and the different types of products[3].
Sophistication
- See our flowchart[2] summarising, amongst other things, how sophistication will be assessed.
- Customers assessed as ‘non-sophisticated’ for these purposes are included within the review. Customers assessed as ‘sophisticated’ are outside the scope of the review.
- Independent reviewers will verify the sophistication assessment carried out by the banks and customers will be notified of the outcome.
Opt-in and testimony
- Category A customers who have been assessed as ‘non-sophisticated’ are automatically included in the review.
- Category B customers who have been assessed as 'non-sophisticated' will be invited to opt-in to the review.
- Category C customers who have complained to their bank to reach this stage and are assessed as 'non-sophisticated' are automatically included in the review.
- Customers who have been assessed as non-sophisticated will be invited to submit any information relevant to how their sale was conducted.
Compliance
- Category A sales do not need to be assessed for compliance and can proceed straight into redress phase (however, to determine the appropriate redress, the banks will still need to review the sale and may need to meet with customers).
- Category B sales (where the customer is assessed to be 'non-sophisticated' and has opted-in to the review) and Category C sales (where the customer has made a complaint to the bank and been assessed as 'non-sophisticated') will be assessed for compliance against the regulatory requirements.
- These include the relevant conduct of business rules and Principles for Businesses in force at the time of the sale.
- Category B and C sales assessed as non-compliant will proceed into the redress phase. For sales assessed as compliant, the review will end here.
Redress
- Redress will be determined on the basis of what is fair and reasonable in the circumstances. This means putting the customer back into the position they would have been in had the regulatory failings not occurred, including any consequential loss.
- Find out more about what can constitute fair and reasonable redress[4] and what can likely be claimed as a consequential loss
: Editorial amendment page update as part of website refresh