NatWest Business Banking | Interest Rate Hedging Products Review FAQs

The review process Frequently Asked Questions
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Icon expand What products are in scope of the review?

The review will cover sales of Interest Rate Hedging Products (IRHPs) entered into between 1 December 2001 – 29 June 2012. These products include:

Swaps - which enable customers to ‘fix’ their interest rate.

Caps - which place a limit on any interest rate rises. If you entered into a cap, you will not be part of the review unless you lodge a complaint to us about your sale. This must happen during the course of the review so we recommend that you do this as soon as possible.

Collars - which enable customers to limit interest rate fluctuations to within a simple range.

Structured collars - which enable customers to limit interest rate fluctuations to within a specified range, but involves arrangements where, if the reference interest rate falls below the bottom of the range, the interest rate payable by the customer may increase above the bottom of the range.

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Icon expand Which customers are in scope of the review?

The agreement with the FCA states that the scope of the review will be limited to customers who satisfy three ‘eligibility criteria’:

  • The customer was classified as a ‘private’ or ‘retail’ customer at the time of the sale.
  • The customer was sold a qualifying ‘interest rate hedging product’, and,
  • The qualifying product sale was completed during the period 1 December 2001 – 29 June 2012.

Of those customers who are classified as ‘private’ or ‘retail’, only those who are then assessed to be “non-sophisticated” will be included in the review. The Review team will assess the sophistication of all in-scope retail clients and private customers to see if they meet the “sophisticated” criteria laid down by the FCA.

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Icon expand What information is being reviewed?

All relevant information in relation to every in-scope IRHP is being reviewed.

The review team will also take into account any complaints that have been made and will invite you to provide any further information that you may have in relation to the sale.

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Icon expand How will the review team determine if I am 'sophisticated' or 'non-sophisticated'?

The review team will be applying the FCA criteria to determine whether you are ‘sophisticated’ or ‘non-sophisticated’.

An explanation of the Sophisticated Customer Criteria can be found on the FCA’s website.

If you would like to see how your business would be classified for the purposes of the review, you can go to the FCA’s flowchart.

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Icon expand How will I know when I enter the review process

We have already written to all customers who had sales that may fall within the scope of the review. The next stage will be when we write to you to confirm whether you are assessed as either ‘non-sophisticated’ or ‘sophisticated’.

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Icon expand What has the bank committed to the FCA regarding not making changes to customers' facilities whilst the review is on going?

Part of the commitment we have given to the FCA is that, except in exceptional circumstances, such as, for example, where this is necessary to preserve value in the customer’s business, we will not foreclose on or adversely vary existing lending facilities (without giving prior notice to the customer and obtaining their prior consent) until it has issued a final redress determination and, if relevant, provided redress to that customer.

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Icon expand What is redress?

Where it has been determined that the sale did not meet the required regulatory requirements, the sale will be considered for redress, where appropriate. Redress must be fair and reasonable in each case. Where appropriate, having considered all the evidence, and in agreement with the Independent Reviewer, redress may take a variety of forms. Redress could include a mixture of cancelling or replacing existing products with alternative products, and partial or full refunds of the costs of those products. The Independent Reviewer, approved by the FCA, must be satisfied that we have reached a fair and reasonable outcome.

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Icon expand What does the RBS offer to accelerate redress payments actually mean?

On Wednesday 23 October, RBS Group confirmed it had reached agreement with the FCA that it will accelerate payments to customers where a fair and reasonable redress outcome is reached resulting in a redress payment being due.  This means that any initial redress offered to a customer will be payable (together with interest payable at 8% simple on such amount) upon acceptance of the initial redress payment offer.

In the event that the customer subsequently provides evidence of additional consequential loss (i.e. a loss that was materially caused by RBS not fully complying with the relevant regulatory requirements in respect of the IRHP), any successful claim for such amount will be paid separately.

Agreeing this accelerated redress payment process with the FCA importantly enables RBS to make redress payments prior to evaluating any additional consequential loss claims, which may otherwise delay the payment of redress to eligible customers.

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Icon expand I was sold an IRHP before 1 December 2001 - will it be included in the review?

Sales prior to 1 December 2001 will not be included in the review. However all customers are entitled to complain through the normal complaint channels if you are unhappy with your sale – see the FAQ section below on complaints.

The agreement with the FCA states that the scope of the review will be limited to customers who satisfy three ‘eligibility criteria’:

  • The customer was sold a qualifying ‘interest rate hedging product’, and,
  • The qualifying product sale was completed during the period 1 December 2001 – 29 June 2012, and,
  • The customer was classified as a ‘private’ or ‘retail’ customer at the time of the sale.
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Icon expand What is having your say?

When we write to you, you will have the opportunity to provide any information you may wish to share about the sale of your IRHP. This can be provided in writing, over the telephone or face to face.

You are actively encouraged to provide this information and can do this at any stage.

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Icon expand Should I give the Review Team more information?

An important part of reviewing each IRHP is understanding the sale from the customer’s perspective. As such, we actively encourage you to provide more information.

The FCA also states in its Report, ‘Interest Rate Hedging Products - Pilot Findings’, that it would encourage all customers to take advantage of the opportunity to engage in the review. The FCA reports that they have received positive feedback from customers on the engagement process, and that they have seen a number of cases where customers’ input into the process has affected the outcome of the review.

Information may be provided to the review team at any time, however we would suggest you do not do this until you have been advised of your inclusion in the review following the Sophistication test. We will advise you of the result of the test and invite you to have your say at that time.

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Icon expand Who can attend the meeting if I choose to provide more information?

If you would like to provide more information you can request for the Independent Reviewer and/or an appointed advisor to be present when you provide further details via phone or face to face.

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Icon expand What is the FCA saying about the review?

The latest FCA information is available on the FCA website.

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Icon expand Who is performing the review? How do we know that customers will be treated fairly?

The Independent Reviewer is also known as the Skilled Person. There is information detailing the role of the Independent Reviewer on the FCA website.

The case review team comprises people who are independent from the relationship teams and who were not involved in the product sales process.

The case review team has been trained in line with FCA principles and all of the team are accredited. Notwithstanding this, in all cases their work is reviewed by the Independent Reviewer.

Should there be a conflict of interest at any point during the review there is a second Independent Reviewer in place to resolve this.

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Icon expand How long will the whole process take?

Each case will need to be reviewed thoroughly and there is much detail to consider. It is not possible to give clarity as to when each case may reach a conclusion.

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Icon expand When will I enter the review process?

Given the nature of the review process, it is not possible to conduct the review of all customers simultaneously, therefore we have agreed with the FCA that we will prioritise the review of sales of IRHPs to customers in financial difficulty.

We will continue to provide all customers with regular updates until we are able to inform you of the outcome of your sophistication test and whether you will be part of the review. In the meantime, you do not need to do anything unless you were sold a simple CAP, in which case you will need to lodge a complaint for your sale to be reviewed.

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Icon expand I want to make a complaint about the review or aspects of the sale of my IRHP. How do I do this?

You can make a complaint by any of the following methods:-

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Icon expand I have made a complaint relating to IRHPs - what is happening with this?

All customer complaints are acknowledged upon receipt. Where you have made a complaint about your IRHP, this will be considered under the review, outside of the bank’s normal complaints process.

The response to any complaint will be included as part of the final outcome letter to you in relation to the review.

Where you are outside the scope of the review (or you fall outside the scope of the review following the sophistication test), your complaint will be investigated in line with the bank’s normal complaints process.

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Icon expand Can I use a Claims Management Company to deal with my case?

The review process has been approved by the FCA, it is not complicated and the review will be overseen by an Independent Reviewer, so you do not need to pay for specialist advice in order to achieve a fair and reasonable outcome.

Here is what the FCA has to say about claims management companies: “There are claims management companies who may offer to submit a customer’s complaint to the bank or the FOS. However, they will charge for using their services and this could involve the payment of a significant fee to a claims management company (relative to the amount of any redress received). Customers do not need to use a claims management company because the process is straightforward.”

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Icon expand What rights do I have under the Financial Ombudsman Service (FOS)?

If you are not satisfied with the outcome of the review you will have the opportunity to refer your complaint to the FOS, subject to meeting their eligibility criteria. Please refer to the FOS website for further details. If you are not eligible for the FOS you may wish to consider seeking legal advice.

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