Result of interest rate swaps known and now…

In recent years, there has been a lot of fuss about interest rate swaps. Most swaps have already received an advance or an offer based on the Interest Rate Derivatives Recovery Framework. In the meantime, the banks have paid out about €1,27 billion to victims. This year there is still a major aftermath of complex interest rate swap files. This mainly concerns offers from Rabobank and ABN Amro.

At the end of last year, an accelerated action was taken by banks, whereby offers were sent that had not yet been checked by a so-called 'external file assessor'. Where previously the banks were still obliged to prepare the files in advance, get checked by external parties (to prevent 'butchers from testing their own meat'), this rule has been changed for the sake of speed.

It was important that more progress was made and, according to the Netherlands Authority for the Financial Markets (AFM), it was therefore allowed to carry out an audit afterwards. However, practice has shown that this does not entail full control. This is only done in a weakened form, with the help of partial observations. It is therefore important for the customer to critically review the offer.

Important: check offer
It has also become apparent that customers are not very aware of the possibilities offered by the Recovery Framework for higher compensation. It is therefore very important to check the data (input). In many cases, the customer calls in his in-house accountant, who only makes a final calculation of the compensation. This while a higher compensation does not so much follow from the calculation, but depends on identifying relevant aspects that could lead to a higher outcome. The customer would do well to critically assess the offer, especially if there are several derivatives and/or loans.

A loan less under the interest rate swap or for a shorter term can already lead to an offer that is tens of thousands of euros higher. In a recent offer, such an interest rate swap, for which I had already started a complaint procedure for some time, was compensated by the bank (which meant a compensation of several hundred thousand euros). This is because, on the basis of the Recovery Framework, there were no loans that could be taken into account for the interest rate swap.

Clarity about the creation
For customers who still have the option, it is advisable not to agree too quickly or to be rushed by a bank. An offer cannot expire earlier than 12 weeks after the date. This gives you as a customer sufficient time to check the offer carefully. The fear that the offer could suddenly be withdrawn early when asking questions is unjustified. As a customer you have the right to know how the offer came about.

Despite the fact that Rabobank still seems to care little about this, this also applies to its calculation. It is also up to the customer to raise it if a correction is needed that leads to a higher outcome.

Outcome file assessor and Binding Advice?
Now that many customers are still going to receive a final letter from the bank, I recommend that you take another critical look at this. It is important to know that many customers (and also their accountants) are little familiar with the possibilities of Binding Advice based on the Recovery Framework. A progress report from January this year showed that of the tens of thousands of customers last year, only eight customers submitted a Binding Advice request and that only 1 session took place.

This makes it clear that there is too little awareness among customers to make use of the Binding Advice option. Although this advice is only open to certain situations, this number (given the number of offers) could be much higher. With the strict terms that apply to the Binding Advice (ie within 4 weeks after signing the offer letter or within 4 weeks after the outcome of the external file assessor is known), the customer is expected to respond quickly. Despite the fact that it is now a holiday, this will require action from the customer. This is to prevent that afterwards people have the feeling that they have left a large amount behind.

Marianne Adama

Marianne Adema is a lawyer at Adema Advocatuur and Advice. She specializes in financial law, agricultural law and real estate law. Adema assists many agricultural entrepreneurs and has an advisory and litigation practice. She is also a legal advisor on various wind turbine projects.

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