30/03/2025
Dentons Defends FCA in Dispute Over Redress Scheme
By Paula de la Calva Rodriguez (As part of the Women’s Commercial Week)
This week’s key terms/concepts:
• Financial Conduct Authority (FCA): A financial regulatory body that operates in the UK, independently to the Government, regulating financial firms that provide services to consumers.
• All-Party Parliamentary Groups (APPGs): An informal, cross-party parliamentary group focused on specific issues such as corporate governance or financial regulation.
• Redress Scheme: A scheme designed to settle or resolve complaints made by consumers against members of the scheme, such as a bank or financial institution.
As part of the Women’s Commercial Week, we are releasing various articles celebrating recent legal news surrounding women’s successes and achievements, including a special article focusing on the life and achievements of Dame Fiona Woolf. To find out more about the Women’s Commercial Week, read here.
What is the dispute, and why is it significant?
On March 14th, a group of lawyers from Dentons, led by Katharine Harle, successfully represented the Financial Conduct Authority (FCA) against the APPG helping them avoid further legal action in the redress scheme for mis-sold Interest Hedging Products. This scheme arose in 2012-13 as a way to compensate the banks’ sales of Interest Hedging Products from 2001-2011, but was criticised for being selective to only customers classified as Private Customers or Retail Clients under the FCA rules.
The courts’ position reinforces the idea that financial regulators such as the FCA have the final authority over compensation schemes, and establishes that regulators are not obligated to revisit past decisions. The decision also alleviates potential financial liabilities for banks and enhances financial stability within the banking sector, as banks can operate without the uncertainty of being harmed by retrospective regulatory changes. Additionally, it demonstrates the importance for Small and Medium Enterprises (SMEs) to understand the financial products and associated risks and rely heavily on bank lending, which could have been put at risk if the courts ruled against the FCA.
The FCA acknowledged past shortcomings and has said they are committed to improvements, which will ensure more transparent regulatory interactions and predictable compliance strategies.
What does this mean for Dentons?
It is important to consider this case when analysing how law firms approach regulatory cases. There will likely to be a change in commercial litigation strategies, with firms such as Dentons ensuring to advise their clients on how to protect themselves from future regulatory challenges and compliance. This may also lead to a decline in the number of cases challenging the FCA decisions in the future, as law firms will be less likely to bring these types of cases without clear legal grounds.
Who is Katharine Harle?
Katharine Harle leads the UK Regulatory and Investigations team in Dentons and was also the lead counsel in this case. Her work consists of advising on all aspects of the financial market and regulatory work , governance and conduct. She has prior experience as a FCA lawyer, including working in the Enforcement division in many of the most regulatory issues including PPI, Keydata, Libor and Woodford. Harle has been described in The Legal 500 as a ‘remarkably knowledgeable financial services practitioner‘ who ‘deploys her many years of experience within the regulator’.
Lex Weekly 