The Regulatory Rules

Interest rate protection products or swaps are financial derivatives or specifically "contracts for differences" within Article 85 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. Those advising on them therefore have a duty to comply with the statutory rules at the time of the transaction.

In summary there is (and was) a duty that the adviser:

• Conduct its Know your Customer requirements.
• Provide a ` clear fair and not misleading` explanation of the product.
• Take reasonable steps to ensure that the client understands the product and the risks involved.
• Ensures the product is suitable.

There has commonly been a practice of `bundling`. This is selling one or more products as one. An interest swap will often be sold as a condition of a business loan. This is fundamentally unlawful when sold with a regulated product.

For further information, please contact Robert Morfee, Clare Harries or Catherine Zakarias-Welch