IRHP: agreements with the banks and instructions to the independent reviewers

In June 2019 the FCA Board commissioned an Independent Review of the FSA, and subsequently the FCA’s, supervisory intervention on Interest Rate Hedging Products. On 14 December 2021 we published the Independent Reviewer’s report and the FCA’s response to its recommendations.

Agreements with the banks

The terms of our agreement with the nine banks, which were first published by the Treasury Committee on 12 February 2015, comprise:

  1. The initial agreements reached in June/July 2012.
  2. The supplemental agreement reached in January 2013, which reflects changes made in light of the findings of our pilot exercise.
  3. A letter sent to each bank in January 2013, which provided more detailed information on how the review would operate.

There are minor differences between the generic versions of the documents, above, and some of the final versions that were signed by the nine banks. In particular the recitals to the agreement may differ to reflect the different circumstances of the banks when they entered into the agreement. None of these minor differences have any bearing on the scope of the review, how the reviews are carried out or on the responsibilities of the banks in conducting the review.

Instructions to the independent reviewers

To ensure that outcomes are fair and reasonable, the banks’ review of every case is overseen by an independent reviewer.

Using s.166 of the Financial Services and Markets Act 2000, we required the banks to appoint the independent reviewers (also known as 'skilled persons'). The s166 requirement notice sets out what we required the banks to appoint the independent reviewers to report on.

Included in their role is reporting on whether the banks have identified and contacted all eligible customers, and reporting on the banks’ engagement with customers, which includes attending meetings as silent observers. The independent reviewers do not engage directly with customers, but they have access to all of the information provided by the bank and customer, and they report regularly to us on how the banks are performing.