What products are in scope of the review?
The review will cover sales of IRHPs entered into after 1st December 2001. These products include
- Collars: which enable customers to limit interest rate fluctuations to within a simple range.
- Structured collars: which enable customers to limit interest rate fluctuations to within a specified range, but involves arrangements where, if the reference interest rate falls below the bottom of the range, the interest rate payable by the customer may increase above the bottom of the range.
- Fixed rate swaps: which enable customers to 'fix' their interest rate.
The review will not include interest rate caps (which place a cap on any interest rate rise) unless the purchaser complains to Barclays about its sale during the course of the review.
Which customers are in scope of the review?
Only customers classified as “retail clients” or “private customers” are in-scope of the review. Of these, only customers who are assessed to be “non-sophisticated” will be included in the review.
Barclays will assess the sophistication of all in-scope retail clients and private customers to see if they meet the FCA’s “sophisticated” criteria.
How will Barclays determine who is a ‘sophisticated’ and who is a ‘non-sophisticated’ customer?
Barclays will be applying the FCA’s criteria to determine which customers are ‘sophisticated’, and which are ‘non-sophisticated’. This criteria was revised by the FCA following their assessment of the pilot exercise to ensure the review is focused on those small businesses that were unlikely to understand the risks associated with these products.
For a full explanation of the Sophisticated Customer Criteria including what has changed, please see the FCA’s policy document. This can be found on their website (PDF 500KB, new window).
If you would like to see how your business would be classified for the purposes of the review, you can go to the FCA’s flowchart (PDF 205KB, new window).
What has changed between Pilot and Main?
The most notable change was the FCA’s decision to revise the sophisticated customer criteria, however for a full explanation of what has changed, please see the FCA’s policy document. This can be found on their website (PDF 500KB, new window).
How will I know when I enter the review process?
When we have completed your sophistication assessment, according to the criteria agreed with the FCA, we will send you a letter that will either let you know you are:
a) Non-sophisticated, and therefore in-scope of the review. All relevant next steps will be clearly outlined for you in the letter.
b) Sophisticated, and therefore out of scope of the review.
However, customers who purchased structured collars do not have to opt into the review, and therefore will be asked by Eversheds or TLT if they wish to participate in a fact find.