It seems not a week goes by without the scandal involving mis-sold swaps rearing its head. The Bank of England stated last week that British banks had a “dreadful record” of mis-selling complex interest rate hedging products to small businesses.
The problem, for those still hazy on what all the fuss is about, is that major banks in the UK sold many businesses hedging products and interest rate swaps to supposedly protect them against interest rate rises. However, these businesses ended up facing crippling costs after the base rate was cut to a record-low of 0.5 per cent in March 2009.
The result of the aggressive mis-selling of the interest rate products was that it left companies financially out of pocket, often without them even being aware of the extent of the damage. Frenkels Forensics’ expertise in forensic accountancy has played a big part in helping businesses recoup some of the money that they have lost in this process.
Indeed, last year the Financial Conduct Authority ordered Barclays, Royal Bank of Scotland, HSBC and Lloyds Banking Group to set aside £3.75 billion to compensate for the potential 30,000 cases of mis-selling. However, Reuters has reported that only a third of this money has been claimed so far.
The losses, which not only arise from the additional interest charged but also from any consequential losses to the business, are there to be reclaimed, but companies must know how to do so.
Frenkels Forensics can help prepare the necessary reports which set out the consequential losses arising from the mis-sold swaps; by clearly demonstrating to the banks the effects of their mis-sold products, a business is going to be far more likely to receive the money that is owed to them.
If you’re looking for advice in any aspect of forensic accountancy, then do get in touch via Twitter, Google+, LinkedIn or by visiting our website www.frenkels.com.
By Vitek Frenkel – find me via Google+