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Will the FSA’s recent findings mean a litigation bonanza?

Another day, another banking scandal but will the FSA’s recent findings about the mis-selling of interest rate swaps give rise to a litigation free-for-all, ask Clive Zietman and Tom Otter

8 February 2013

The FSA’s announcement that 90 per cent of interest rate hedging products sold to “non-sophisticated” customers were non-compliant was a staggering statistic. The FSA’s sample was small but the huge percentage suggests that, like all the best icebergs, the full review (due to be completed by Barclays, HSBC, RBS and Lloyds in around 12-months time) is likely to reveal a host of dreadful practices lurking below the waterline. The fact that Barclays has already set aside £850m for swap mis-selling suggests real concern. Several analysts estimate the cost to the banking industry will exceed £2bn.

This scandal will probably not result in a plethora of simple easy-to-process claims of the PPI variety. The independent reviewers (paid for by the banks) will supposedly assess each sale to a “non-sophisticated” customer and decide what constitutes fair and reasonable redress. In many cases the claims will not be swif...

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