Councils using ‘Intelligence’ to track down low EPC properties and fine £5,00015:08 PM, 29th March 2021
About 3 weeks ago 39
If you have been mis-sold an interest rate hedging product the most common route for redress will be through the FCA Review. Having your complaint reviewed as part of the FCA Review process is subject to an initial classification as a “non-sophisticated” customer. The ‘sophistication’ test is based solely on turnover, balance sheet and number of employees, not the actual level of understanding that the client had of complex derivative products at the time of entering into the interest rate hedging products. The merits of the test, as a result, are somewhat questionable. The sophistication test becomes even more onerous if a company was part of a group.
A criticism of the sophistication test is that the monetary approach applied by the FCA undermines the Review, for example a property company may have a large balance sheet and a moderate number of employees however it may not have, in reality, a sophisticated board of directors with in-depth knowledge of the mechanics of the financial markets.
The Banks do not appear to be classifying clients uniformly. Some clients have been classified as “sophisticated” when it appears that they would have been “non-sophisticated” and vice versa.
It does not always follow that a company classified as a Retail Client at the time of entering into the interest rate hedging product, would be classified as a “non-sophisticated” client.
It is therefore essential, prior to any claim being made, that you are aware of your classification under the sophistication test. Even if you are deemed to be sophisticated that is not the end of it as you may be entitled to challenge this classification if you believe that you have been classified incorrectly.
Being classified as “sophisticated” does not bar you from making a claim it merely prohibits you from having your claim reviewed as part of the FCA Review.
Because “sophisticated” clients are not automatically included within the FCA Review we often find they need assistance challenging their classification, or at times understanding why they have been so classified. Where appropriate we will challenge a client’s classification as “sophisticated” within the detailed letter of complaint. We have had experience of challenging a client’s sophistication, and getting them reclassified.
Where this is sadly not an option we advise our clients of the merits of the alternative options. We have experience of handling claims via all of the available avenues.
“Sophisticated” clients still have valid grounds for making complaints in respect of having been mis-sold an interest rate hedging product; they are just not within the current FCA Review criteria. We have been actively requesting that the FCA review this criteria as it is manifestly unfair.
If you believe that you have, or may have, been, mis-sold an interest rate hedging product, do not be dissuaded due to your classification by the Bank. If you require any more information regarding this matter please do not hesitate to get in touch.