Holmcroft Properties, represented by law firm Mishcon de Reya, has been granted leave to judicially review the actions of KPMG LLP (‘KPMG’) as ‘Independent Reviewer’ under the Financial Conduct Authority (‘FCA’) Review and Redress Scheme (the ‘FCA Scheme’)The FCA Scheme was established following the discovery of serious and widespread failings in the sales of Interest Rate Hedging Products (‘IRHPs’) by a number of UK banks. The mis-selling has caused substantial harm to a large number of small and medium-sized enterprises across the UK.
The stated purpose of the FCA Scheme was to deliver fair and reasonable redress to the victims of mis-selling. The core principle was that redress should aim to put customers back in the position they would have been in had the breach of regulatory requirements not occurred.
The FCA approved the appointment of KPMG to act as ‘Independent Reviewer’ in respect of the scheme as operated by both Barclays Bank and Royal Bank of Scotland. These two banks are involved in the majority of the IRHP sales being reviewed under the FCA Scheme.
Observers have argued that the FCA Scheme has not been operated consistently and that KPMG has approved a number of redress determinations, unfavourable to the small businesses concerned, which determinations appear to have been reached in violation of the rules and principles of the scheme. The FCA has been criticised by MPs, including members of the Treasury Select Committee, for failing to ensure the fair operation of its scheme.
Some of the small businesses concerned believe that they cannot obtain justice under the FCA Scheme as currently operated and are now considering remedies through the Courts, for example by applying for judicial review of KPMG’s decisions as ‘Independent Reviewer’.
One such business, Holmcroft Properties, a nursing home operator represented by the law firm Mishcon de Reya, was granted leave on 24 April 2015 to bring a judicial review aimed at quashing its redress determination under the FCA Scheme and for KPMG to be directed to reconsider whether the redress offered was “appropriate, fair and reasonable”.
The date for the full judicial review has not yet been announced but the case is expected to be heard in the latter part of 2015.