Lawmakers are trying to get a judge to overturn a decision not to expand a British redress scheme for businesses that were mis-sold interest rate "hedging" products. They say that this allowed banks to cut compensation payouts by 10 billion pounds, which is a lot.
Nine banks paid out 2.2 billion pounds ($3 billion) to small businesses that were mis-sold products from 2001. The redress arrangement was set up nearly a decade ago.
That is not what an independent review said last month. Instead, it noted that excluding about 10,000 sales of the products, which were meant to protect companies from rising interest rates, was an "inadequate regulatory response."
If you buy something at a lower rate, you will have to pay a lot more for it. This can be tens of thousands of pounds.
According to the review, people who make more than 6.5 million pounds a year, have a balance sheet of more than 3.26 million pounds, or have more than 50 employees can not be part of the scheme. The FCA agreed to this after some banks told them to.
There was no reason why the regulator agreed to the change, and the review found it did not say why.
"The regulator does not have any proof to back up their decision, and they can not even remember why they excluded so many victims. They made it easier for banks to cut up to 10 billion pounds off their compensation bill, which means they could pay less.
In December, FCA CEO Nikhil Rathi said that more action would not be appropriate or proportionate. The group said it had asked Rathi to think about what he said.
This means a judge will look into whether or not a public body made the right decisions. It said it was now applying for a judicial review.
They said that when they were selling products and setting up a voluntary redress scheme, it was very different from now. As a spokesperson said, "We have agreed to many of the recommendations made by the independent review." @via Reuters.