Company: Mills & Reeve LLP
Category: Interest Rate Derivatives
Published: 03 May 2013
Swaps that were sold to companies at high interests rates before the recent credit crisis performed poorly when the rate fell to historic lows in 2008. As a result, companies have been forced to make higher rate repayments than available on the open market and face significant charges to end their agreements. An investigation by the FSA into the mis-selling of interest rate hedging products (IRHPs or "swaps") has determined that 90% of sales reviewed did not comply with the regulator's requirements. The inquiry has found that banks failed to fully inform clients about the nature of the product or charges that apply for early termination.
This white paper analyses the case of Green & Rowley v RBS and the impact that the judgment will have on financial institutions and their insurers in the future. It provides you with insight into the steps that the FSA are taking to ensure that banks provide appropriate compensation to their clients and remain compliant.