Information on John Swift QC's Independent Review of Interest Rate Hedging Products (IRHPs) - June 2022

At the same time as seeking a reviewer for the review into the supervisory intervention on Interest Rate Hedging Products (‘IRHP’), the FCA was seeking reviewers for two separate reviews: the review into the failure of London Capital & Finance, and the Connaught review.

In relation to IRHP, it was considered that the Independent Reviewer should have a legal background, plus experience in financial services.  FCA employees had prepared a long-list of individuals and subsequently a short-list and that list included John Swift. Names came from recommendations from FCA colleagues, and from online searches of regulatory consultancies, law firms and barristers’ chambers with relevant expertise.

In total, 9 people were approached from a shortlist of 21 for the role of IRHP Independent Reviewer by direct email from Charles Randell.  They were all asked about conflicts once they confirmed interest and some were rejected on that basis. With regard to IRHP, the FCA also produced a list of firms and individuals involved in the IRHP matter to confirm whether the candidates for Independent Reviewer had any involvement and potential conflict of interests.

There was a three-stage process for the recruitment and selection of the Reviewer. Charles Randell met those candidates who expressed an initial interest, either in person or by teleconference, to give them more information about the reviews, assess their interest and likely suitability. Promising candidates were then met by a wider staff team for further assessment of their suitability for the role, and for them to ask questions about the practicalities of undertaking the review. A Board sub-committee ultimately decided whether to appoint reviewers based on recommendations made to them following these meetings for all three reviews. John Swift was identified as the suitable candidate for the IRHP role and the Board Sub-Committee agreed to approve John Swift. This was in line with the process carried out for the other reviews and previous reviews.

We are not aware of any prior link between John Swift QC and the FCA, anyone in its leadership team or those whose conduct might be scrutinised by the review.

There were no special measures put in place to prevent any potential conflicts of interest arising ex-post. The FCA’s contract with John Swift QC was specific and limited to the role of Independent Reviewer for the IRHP review. It has now concluded. Any future potential conflicts would be assessed in the normal way.

The FCA generally supported John Swift QC in the procurement of his support team. 

As regards the appointment of Ashurst LLP (the law firm who supported John Swift), the FCA, on behalf of and in conjunction with the Independent Reviewers, conducted tender exercises to appoint the law firms to support all three Independent Reviews. The tender exercise for the IRHP Independent Review was unsuccessful and none of the firms invited to tender submitted a response. As a result, John Swift QC again considered the relevant procurement frameworks and suggested a number of firms, which included Ashurst LLP, but wanted time to consider this further. The FCA advised John Swift that, as the FCA had conducted a tender exercise, we could move directly to award the contract to one firm. The FCA highlighted to John Swift QC that Ashurst LLP had submitted a tender for one of the other Independent Reviews and asked whether he wanted to invite Ashurst LLP to submit a proposal.  John Swift agreed and Ashurst were duly invited to submit a proposal.  Thereafter, FCA employees attended the meeting with Ashurst LLP at John Swift QC’s request. However, the decision on whether to appoint Ashurst LLP was solely John Swift QC’s.

With regard to the Communications Adviser to support John Swift, the FCA initially went out to 1 tender for Communications Support covering all 3 Independent Reviews. We only received 1 response across all 3 reviews and the responding firm was not appointed for the IRHP Independent Review. As a result, the FCA moved to a direct award and suggested a potential suitable supplier. John Swift met with the individual and it was his decision alone to appoint that individual.

Details regarding John Swift’s support team including their past experience can be found on pages 491-493 of his report. This section notes that one individual from the Ashurst LLP Support Team, Anna Varga, had previously worked for the FCA but had not been involved in matters relating to interest Rate Hedging products.

Additionally, David Capps and Rosie Stanger (both from Ashurst LLP) provided advice to Mark Zelmer during his Independent Review of the Prudential Supervision of The Co-operative Bank Plc. This was an HMT Directed Independent Review aimed at the actions/inactions of the Financial Services Authority. The FCA, as one of the successor organisations, was involved in this review in the provision of relevant material and participation in the representations process.

These are the only prior links that the FCA team assisting with the facilitation of the review are aware of. No special measures in relation to the support team were put in place by the FCA. We are, however, unable to determine whether any other member of FCA staff might have had any connection with individual members of the support team.

There were no special measures put in place to prevent any potential conflicts of interest arising ex-post.  Any future potential conflicts would be assessed in the normal way.

The conduct of the investigation, including the stakeholders and individuals interviewed, was a matter for John Swift QC. The FCA does not hold details of all the parties interviewed by John Swift QC and who conducted the interviews, so we are unable to answer the questions about how many people were interviewed by John Swift’s support team and not John Swift.

The FCA does not hold copies of the interview recordings or transcripts. The interview transcripts, together with other documentation relevant to the Review, are held by Ashurst, the law firm who supported John Swift QC. However, we understand copies of the interview recordings were not retained by Ashurst.