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Tag: Financial Services Authority

  • 90% Financial Services, Interest Rate Swaps, Mis-Sold UK

    The following is a Guest Post by Mr,Paul Simms from Reflect Digital UK.

    Interest Rate Swaps.
    Interest Rate Swaps.

    The Guest Post.:

    ‘Unsophisticated’ British firms due to be compensated for mis-sold interest rate swaps

    British companies hoping to file a claim against the banks after being mis sold interest rate swaps are said to be running out of time to do so. The Financial Services Authority have estimated that around 90% of interest swap contracts over the last six years may well have been done so illegally. The FSA has attempted to establish a distinction between ‘sophisticated’ and ‘unsophisticated’ businesses, with the former being likely to have been aware of the risks that they were taking when they signed up for the products. It’s also been claimed by many sources that by introducing products that successful businesses were unlikely to sign up for, the banks were in effect targeting vulnerable businesses that were only ever likely to be harmed by the services.

    It’s hoped that the full reviews will be completed within a six month period. Companies that did not sign up for the hedging products before 2007 are not permitted to take action due to the Limitation Act 1990, which demands that claims must be put forward within six years of the products being signed up for. Companies that suspect that they may be eligible for compensation have been urged to act at the earliest opportunity to ensure that their claims will be dealt with.

    The interest rate swaps scandal is the second mis-selling scandal to hit the UK’s banks in recent years. It comes after scores of British customers were compensated after being tricked into signing up for Payment Protection Insurance – a scheme that was supposed to protect customers if they could not make credit repayments after falling ill for instance. Many customers found that they were signed up for products when they didn’t want, need or ask for them, often without their consent.

    The UK arm of Barclays Bank has already set aside some £850m for compensating the victims of mis sold interest rate swaps. UK Solicitors like Lamport Bassitt have set up specialist departments within their firms to deal with swap mis-selling claims. The FSA have ordered a number of UK banks to review cases of interest rate swaps and to provide redress if the products were found to have been sold unfairly. With the interest rate swaps, customers were promised a ‘fixed rate’ of interest on loans by being compensated by the banks if interest rates went up, and paying extra to them if they went down.

    However, when interest rates started to fall to historic lows, customers were hit hard, being forced to pay substantial amounts to the banks and finding that the costs involved in ending the contracts were also exceptionally high. Businesses were also alarmed to find that the ‘swaps’ and ‘loans’ were two different products. This meant that even when a loan was paid off, they were still obliged to continue funding the ‘swaps’.

    – http://www.swapmissellingclaims.co.uk/

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    CH.

  • Bank Offers Incentives to ‘Missell’ Financial Products.

    It is known in the marketing circles that banks do sell their products by cheating customers( this is the meaning of all jargon as used like misrepresentation, misselling).

    'Misselling By Bank 'Jpg
    Misselling By Bank

    But the Bank goofed up in  on its strong points ,accounts.

    Lloyd’s bank has been caught paying staffers who were misselling, 4 out of 10!

    Beware and do not invest unless  you understand,ask the marketing people to speak plain English and more importantly do not invest in anything that can yield more than 24% / as of now.

    Credit Card companies are guilty of this on a regular basis.

    Story:

    'Lloyd's Bank 'Jpg
    Lloyd’s Bank

    The staggering extent to which high street bank staff chasing bonuses and commission are routinely ripping off customers was laid bare in a scathing report yesterday.

    At the same time, the Daily Mail can reveal that 40 per cent of staff at Lloyds Banking Group earn extra payments if customers are persuaded to buy additional financial products.

    They get bonuses if they can entice millions of loyal account holders to fork out for costly insurance policies or ‘premium’ current accounts which charge a monthly fee.

    Separately, in a report by the Financial  Services Authority regulator, published  yesterday, account holders were said to be viewed only as ‘sales targets’ exploited by  ‘pile it high and sell it quick’ tactics that verge on the criminal.

    Banks were told to clean up their act or face a major clampdown.

    The FSA’s report into the incentive payments has brought another day of shame for Britain’s financial industry.

    It revealed that one firm has been referred to its Enforcement and Financial Crime Division. Sources named the bank as Lloyds, which is 41 per cent owned by the taxpayer.

    “Anrgy: FSA boss Martin Wheatley says: ‘Financial institutions have changed their view of consumers from someone to serve to someone to sell to”

    Ruthless salesmen were said to be so desperate to meet sales targets that they even sell to family members such as their elderly mothers or sisters.

    Others were found guilty of colluding to ‘intentionally overcharge’ a customer to trigger a bonus payout. The report said that some firms pay a ‘Super Bonus’ of up to £10,000 to the first 21 workers who meet a sales target.

    In other cases, staff are not paid a basic salary, which means their own financial survival depends on their ability to sell, a situation the report warned ‘significantly’ increased the risk of mis-selling.

    Yesterday Martin Wheatley, of the FSA, said: ‘Some time ago, financial institutions changed their view of consumers from people to serve, to people to sell to.’

    He read the riot act to the industry – which also includes insurers and investment firms – telling companies to ‘clean up their act’ or face a clampdown in the next 12 to 18 months.

    Firms can continue to pay commission, but such payments must benefit the customer, not the salesmen.

    ‘It has been too easy, for too long, for those selling or giving advice to be motivated solely by the rewards on offer to them, rather than how to enrich their customer,’ he said.

    ‘We all know what it is like to walk into a bank to do something simple, like paying a credit card bill, only for the person behind the counter to ask if you would like to extend your credit, take out more insurance or look at their competitive mortgage rates?’

    He warned some of the mis-selling was ‘very close to fraud, which is a criminal offence’

    The scale of the mis-selling is shocking in an industry which provides products essential to the lives of millions.

    Of the 22 firms investigated by the FSA between September 2010 and September 2011, 20 were found to have ‘features in their incentive schemes that increased the risk of mis-selling’.

    The report highlights one salesman ‘blatantly misleading’ a customer to scoop £1,000.

    In another case, two salesmen ‘colluded to intentionally overcharge’ a customer because the bonus was linked to the amount that the client had agreed to pay for the product.

    Yesterday the Financial Services Consumer Panel criticised the FSA for being ‘slow to respond’ to a problem which has existed for decades.

    Chairman Adam Phillips said: ‘The regulator has made a commitment to change the industry’s behaviour. We hope that this time the industry will get the message and not try to find a way to get around the rules as they have done in the past.’

    Lloyds Banking Group said it had made significant changes to its incentive schemes this year, adding: ‘Today these schemes reward staff for providing high quality customer service, assessed by a wide range of metrics.’

    But it confirmed that around 40,000 of its 100,000 staff were eligible for incentive schemes.

     http://www.dailymail.co.uk/news/article-2198628/Taxpayer-backed-Lloyds-facing-fine-City-watchdog-launches-probe-claims-paid-huge-bonuses-staff-mis-sold-financial-products.html#ixzz25gm1TPYt

  • How Barclays Rigged Bank Rates- emails

    See how greed unfolds and how people callous people are!

    ‘Devastating emails today lay bare how top banks rigged crucial interest rates to mask the scale of their bad debts.

    They show how bonus-hungry traders promised each other bottles of Bollinger champagneto fix the figures that affect millions of homeowners and small firms.

    HOW BARCLAYS TRADERS CONSPIRED TO FIX THE MARKETS

    Barclays PLC President Bob Diamond Between 2005 and 2009, more than 200 requests were sent, usually by email or instant messenger – by traders to the Barclays Libor submitters.

    In one example of several provided by the FSA, a trader emailed the Barclays Libor submitter in March 2006, writing: ‘The big day [has] arrived… My NYK are screaming at me about an unchanged 3(month) libor. As always, any help wd be greatly appreciated. What do you think you’ll go for 3(month)?’

    The submitter replied: ‘I am going 90 altho 91 is what I should be posting.’

    The trader thanked him, saying: ‘..when I retire and write a book about this business your name will be written in golden letters.’

    The submitter then replied: ‘I would prefer this [to] not be in any book!’

    In another example from April 2006, a trader requested low one month and three month US dollar Libor rates shortly before the submission was due.

    He asked: ‘If it’s not too late low 1m and 3m would be nice, but please feel free to say “no”… Coffees will be coming your way either way, just to say thank you for your help in the past few weeks.’

    The submitter replied: ‘Done… for you big boy.’

    ————–

    “Last night – as Barclays was fined a record £290million for its part in the scandal – MPs said the police should be called in to investigate the ‘appalling’ conduct.

    The conspiracy involved interest rates on the wholesale money markets, where banks lend to each other.

    Traders colluded to set artifically low rates to con the markets into believing the banks were in good financial shape in the run-up to the credit crunch.

    Fixing the figures also allowed bankers to make money by taking out bets on the way the rates would move.

    The wholesale rates affect homeowners because they influence how much they pay on variable rate loans and mortages.

    Yesterday senior executives at Barclays said they would give up their bonuses for this year as a result of the record fine.

    THE DAMNING E-MAILS

    But the City regulator said other banks were caught up in the probe – with Lloyds, HSBC and Royal Bank of Scotland admitting they were also being investigated.

    The revelations throw fresh scrutiny on an industry already marred by public outrage at sky-high bonuses, mis-selling scandals and the RBS computer glitch chaos.

    In one of the emails, a trader at a different bank wrote to ‘Trader G’ at Barclays: ‘Dude. I owe you big time! Come over one day after work and I’m opening a bottle of Bollinger.’

    Other emails revealed how they would ‘shout’ across the desk at each other to ‘beg’ for the interest rate to be fixed at a certain level in the hope of making millions for themselves.

    Another said: ‘Coffees will be coming your way either way, just to say thank you for your help in the past few weeks.’

    His colleague replied: ‘Done…for you big boy.’

    The devastating 44-page dossier, published by the Financial Services Authority, revealed the ruthless tactics used by traders to try to fix the wholesale rates – known as the London Interbank Rate (Libor) and the European Interbank Rate (Euribor).

    Chief executive Bob Diamond apologised for the incident Sorry: Chief executive Bob Diamond apologised for the incident and will forgo his bonus this year

    They wanted to keep the rates artificially low as a high Libor rate suggests a bank is weaker than other banks because it is being charged a higher rate of interest to borrow money.

    It is understood that between ten and 20 rogue dealers were involved, all of whom are being or have been dismissed.

    Last night the chairman of the Commons Treasury committee Andrew Tyrie said Mr Diamond would be summoned to explain what had happened.

    ‘This is appalling. It just beggars belief that this sort of attitude should have been so widespread,’ he told Channel 4 News.

    ‘The crucial thing now is to make sure that it is being cleared up. That is why we will be calling in (Barclays chief executive) Bob Diamond to make sure that what’s required had been done in Barclays to improve the culture.

    ‘Banks were clearly acting in concert. I fear it’s not going to be the end of the story, that we are going to find that other banks have been involved.’

    But Labour’s financial spokesman Chris Leslie said the situation was so serious it may have to go ‘beyond the regulators and into a criminal investigation’.

    http://www.dailymail.co.uk/news/article-2165468/Bob-Diamond-shamed-giving-bonus-Barclays-fined-290m-attempting-rig-money-markets.html

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