Business managers and their advisers are wrestling with the financial fallout from interest rate hedging products offered by their banks that went wrong.
After the Financial Services Authority (FSA) recently criticised leading banks after finding that some 28,000 businesses were sold inappropriate interest rate hedges.
In a statement to the market the FSA added that the products had had a “severe impact” on some small businesses and that it expected banks to provide appropriate redress. The banks have now agreed to compensate small and medium sized businesses mis-sold the products, but accountants have been assessing the impact of the scandal, and how affected companies should go about making a claim.
AccountingWEB member jstuckey posted on Any Answers about a client who claimed to have been scammed into taking an interest rate swap by one of the banks.
The arrangement left the balance sheet looking insolvent, which raised the question of how to refer to the interest rate liability under the going concern note.
Have you been affected by the rate swap scandal, and how do you record any consequences in the company accounts?