Break cost mis calculation
Internal bank emails
The bank stated to Herald Scotland on 15th March 2013 that no Tailored Business Loans were micro hedged.
However, we have received copies of internal emails between the bank's treasury advisor and the trading floor in the city in respect of one particular case evidencing a commission equal to approximately 5.5% of the loan. Additionally, the emails evidence that the treasury advisor, Kevin Horne, has used falling rates to increase the bank's commission instead of passing the lower rate to the SME.
The internal emails evidence a commission deriving from an IRSA, whether a micro hedge or otherwise.
A commission equal to 5.5% of the loan paid in one lump sum upon the release of the loan would have precipitated a culture of mis selling if uncontrolled by the bank and which would have required FSA regulation to protect the consumer.
FCA compliance checklist
Terms & Conditions 2007
Section 8.2 (f) evidences the embedding of a swap. Break cost is undefined and instead is left open to the bank to charge as it desires.