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TARFs are back in the headlines
Views

TARFs are back in the headlines

Jackie Bowie Private Equity December 2019
Another day, another story about mis-sold financial instruments.

In her recent article for the Financial Times, Eva Szalay reports how the zig-zagging pound has sharpened concerns over mis-sold forex hedges to small and mid-sized businesses.

Banks are providers of credit and are the counterparties to financial instruments. There are few other scenarios where users enter into fairly exotic instruments while relying on ‘advice’ from the seller of those instruments. We work with some of the largest and most financially sophisticated users of derivatives in the market and even these expert institutions seek an independent voice to guide them through product choices and, crucially, ensure that they are receiving fair and competitive pricing for the instruments they are entering into.

Previous derivative mis-selling cases highlighted the Court’s view, which is that product providers (banks/brokers) are not advisors and cannot be held to account as such. This view is underpinned by ‘non-reliance’ clauses in the product provider’s documentation, leaving businesses to rely purely on trust. Unfortunately, recent years have shown that this is not always wise. Seeking independent advice is a valuable safeguard against an expensive outcome from the wrong instrument.

 

For more information, please contact Jackie Bowie, CEOat JCRA, at jackie.bowie@jcrauk.com.