Sophisticated Customers

Are you a sophisticated customer?

The Financial Conduct Authority have set down a test which will determine whether or not a client is deemed “sophisticated” or “non-sophisticated”.  Only customers that have been classified as “non-sophisticated” will be included within the FCA review.

What is the criteria for determining whether or not a client is “sophisticated” or “non-sophisticated”?  In our opinion the Financial Conduct Authority have failed clients in setting down a rigid test in relation to whether or not a client is deemed “non-sophisticated”.  The test is based on the following criteria:-

  1. Turnover;
  2. Number of employees;
  3. Balance sheet.

In addition to the above criteria, if you have been sold a swap that was more than £10 million you are automatically excluded from the review as you are considered sophisticated.

It is inherently unfair that clients have been categorised as “sophisticated” based on turnover, number of employees and bottom line figure on the balance sheet.  We are aware of some clients that run high turnover businesses but have no experience of interest rate products, for example, farmers.   Farmers generally have high turnover, a large number of assets and a high number of seasonable staff.

If you are classified as “sophisticated”, you still have options in relation to redress via the courts or the Financial Ombusdman Service.

What we can do to help?

We believe that we can assist clients that have been classified as “sophisticated” and believe the client should act promptly in order to avoid claims from becoming statute barred.  If you are classified as sophisticated please do not hesitate to contact us as we can provide you with an initial advice and also run through your options with you. We may also be able to offer litigation funding if your case is suitable.