has several options as to how to gain redress through the review and consequential losses (photo: Reuters)
Barclays has unveiled several redress options for victims of interest rate swap agreement mis-selling but has stopped short of an all-customer blanket payment programme that is delivered before consequential loss calculations.
In a statement to IBTimes UK, Barclays said that while it already provides support to customers which are in financial distress on a case-by-case basis, such as temporarily suspending swap payments, it will also consider whether to grant redress in advance.
"On a case by case basis and in order to support customers in financial distress, Barclays will consider carefully any request to provide an advance on redress offers to businesses whilst their consequential loss claims are being processed, and has already done so on several occasions," said Barclays in an emailed statement to IBTimes UK.
HSBC was the first to announce that it plans to compensate all customers more quickly, in relation to the mis-selling of complex interest rate swap agreements, by using a new system that will pay firms redress before consequential losses are determined.
RBS has followed the same system as HSBC but Lloyds opted to stop short of a blanket two-step system to pay redress to all customers but instead said it is implementing a case-by-case process.
Barclays, however, has presented a "one or the other" approach.
"All customers due redress are being provided with a redress offer covering cashflow refunds together with compensatory interest at the same time they receive their review outcome, and can have the entire amount paid within 24 hours of our receipt of their acceptance, subject to the normal processes and checks for payments," said Barclays in the statement.
This means if customers choose to accept a redress offer without a consequential loss claim, the bank will pay the victim very quickly.
However, if they decide to go forward with an additional consequential loss claim, then they will still have to wait until the outcome of the assessment to receive funds.
Despite these options, Barclays pledged to turn around the assessment quickly.
"Barclays has built a quick and clearly defined consequential loss assessment process which is now in full swing," said the statement.
"If a customer submits a claim within 40 days of their redress offer, we will review and provide them with a final redress offer within 28 days of receipt of their claim."
Previously under the FCA interest rate hedging product review, no payments could be made from banks to customers until the entire process of determining redress was completed.
This prevents a party being able to make claims over and over again and costing firms multiple sets of bills from fresh reviews.
The bank, which sold the contested product, firstly determines whether the IRSA has been mis-sold, with the help of an independent reviewer. It then calculates what redress to offer. The bank then offers the client a redress package, which can include anything from a refund of swap payments to a restructuring of a business loan at a better rate.
Consequential loss claims, which involve the party providing evidence that it incurred losses as a result of the IRSA, are filed separately.
This means that while a bank can make an initial redress offer - a product tear-up or switch and/or compensation - if a company is claiming for consequential losses on top of this, then it would have to wait until after the banks have assessed the application for damages.
The FCA's chief executive Martin Wheatley said in a statement sent to IBTimes UK: "I welcome the move to pay compensation in two stages."
"I've been urging the banks to consider what more they could do to ensure the small businesses affected by swap mis-selling get the compensation they're owed as quickly as possible.
"The announcements over the last couple of days are a good first step."
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