The FSA (Financial Services Authority but now the FCA or Financial Conduct Authority) implemented a directive on 29th June 2012, forcing banks to review the issue of standalone interest rate swap agreements (IRSA) to SMEs. The FSA has established that 90% of the swaps were mis sold. However, the FSA has excluded Tailored Business Loans issued by National Australia Bank from the scheme because the Interest Rate Hedging Product (IRHP) is embedded in the loan as opposed to being sold separately. 

                                                                                                                                        Regardless of the FCA's interpretation of what the European Union have implied in the wording of MiFID; due to the fact that the potential for mis selling of any loan is exactly the same whether the IRHP has been signed separately to the loan or embedded in the loan, IRHPs that are embedded in the loan should be treated in exactly the same way as if they were signed separately to the loan. The European Union did not introduce protection against the mis selling of IRHPs sold separately to the loan only to allow banks to escape the legislation by embedding the IRHP.

Will the European Union Commission please confirm that it was never its intention to allow the circumvention of the legislation by National Australia Bank in this way and that MiFID has been misinterpreted by the FSA and request that the FCA urgently implements a new directive to force banks to review the issue of fixed rate business loans embedding swaps?
10th September 2013    Treasury Committee / Martin Wheatley / Lord Thurso
                                         interview transcript       
24th October 2013    Ian Fraser
28th November 2013     Letter from Phil Thomas (NCSG member) to the FCA and
                                         the FCA response
18th December 2013    FCA letters to HM Treasury relased (after waiting 63 days)



19th April 2014


As a result of an appeal to a rejected FOI request the FCA discloses that 69,738 embedded swap loans were issued and that 35,000 were issued by one bank alone.


FOI3266 Internal review response _signed letter and annex_ 20140331.pdf




31st January 2017  FCA letter to Nick Clegg
"However, we take an interest in the bank's voluntary review and would consider acting if, for example, we saw evidence of conduct that spoke of the fitness and properness of the bank as a whole."

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