Update: reassessment of interest rate derivatives for SME clients: process optimisation speeds up delivery of compensation proposals to clients

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In Utrecht, over 450 colleagues are busy on ABN AMRO’s behalf reassessing the situation of a total of 7,000 clients who purchased interest rate derivatives from the bank. At the end of June 2018, over 5,900 client files were under review. Of these, around 2,200 are close to or in the final stages of reassessment; 600 clients have by now received a compensation proposal checked by an external assessor. ABN AMRO aims to provide clarity to clients by the end of the year, and is doing everything possible to meet that deadline.

External ex post audit

As such, we have looked at ways to optimise our process so clients get clarity sooner. It has been agreed with the Dutch Authority for the Financial Markets (AFM) and the external assessor that files will be checked ex post rather than ex ante. This means we can get compensation proposals to clients earlier. If the client accepts the proposal, the agreed amount is transferred. If the ex post audit indicates that the amount should have been higher, the client will receive the difference. If the audit shows that the amount should have been lower and clients have in fact received too much, they are allowed to keep the difference; they will not be required to pay back the excess amount.

Building maximum capacity

The lead time of the reassessments has been long. After the Uniform Recovery Framework was agreed, a lot of time was invested in consultation to make its implementation possible. A great deal was also invested in attracting and training additional qualified staff, ensuring the ability to work at maximum capacity on the reassessments. What also played a role was the great care that needed to be taken on this task. Apart from the external assessor’s thorough examination, the process features numerous checks and balances. While important, this adds to the lead time.

Advances

Because of the long lead time, all clients within the scope of the Recovery Framework were offered an advance based on the compensation they might expect. Advance proposals totalled EUR 261 million. Vulnerable clients were offered an advance equalling 100% of the total amount they could expect to receive in compensation. Other clients received an advance equalling the ex gratia compensation described in Step 3 of the Recovery Framework.

Further information

For further information on ABN AMRO’s reassessment progress, visit our reassessment website. Information on sector-wide reassessment progress is available on the AFM’s website.

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