Landmark case could provide justice for all victims of mis-selling scandal involving banks, says MP

The FCA maintains it responded appropriately to concerns of IRHP mis-selling between December 2001 and 2011.

In 2013, the FCA’s predecessor, the Financial Services Authority (FSA), entered into agreements with nine banks, which resulted in more than £2.2bn in compensation being paid by those banks to customers who had been mis-sold IRHPs, over the period from 2001-2011, according to the APPG.

The APPG said: “However, more than 10,000 sales of IRHPs to approximately 5,000 customers were excluded from the scheme by the FSA, on the basis of a “sophistication” test, which sought to categorise and exclude victims of IRHP mis-selling based on inflexible and arbitrary criteria.”

William Wragg MP, Chair of the APPG on Fair Business Banking, said: “The FCA's defence in the IRHP mis-selling case is fundamentally flawed, overlooking the widespread harm inflicted on numerous businesses. Our efforts in this judicial review are more than a legal procedure; they are a pursuit of accountability and fairness in the financial system as a whole.”

“This landmark case could pave the way for much-needed reform and, most importantly, secure justice for all victims who have suffered due to the shortcomings in the regulatory approach to the IRHP Redress Scheme.”

An FCA spokesman said: “As set out in our response to the Swift review, we consider the decision in 2012 to limit the scope of the redress scheme reasonable. We also believe our decision not to seek to use our powers to require any further redress to be paid to customers was the correct one and we will argue our case in court. The scheme delivered redress of £2.2bn to thousands of small businesses.”

The statement added: “The terms of the Swift Review made clear that it was not intended to be a route by which the scheme could be re-opened, and the review did not suggest this. However, as a responsible regulator, we carefully considered, in the light of its findings, whether we should take steps to facilitate the excluded customers’ access to redress if mis-sold. We ultimately decided that it would not be appropriate or proportionate for us to take further action.

“In the detailed grounds of defence, we reiterate our view that we acted lawfully in 2012/2013 when making the decisions which established the IRHP Redress Scheme. We reject the claims made by the APPG that the decisions made in 2012/13 and 2021 were irrational or procedurally unfair.

“A group of claimants also applied in 2013 for permission to challenge the original decision on the basis of rationality and were denied this permission.”