RBS are again in trouble for mis-selling derivatives, to which the Bank has countered that the purchaser of the Swap, a small tiling firm, was a "financially sophisticated" customer.

It seems that the main criteria applied by the FSA to determine whether the purchaser/claimant is "financially sophisticated" and therefore entitled to compensation is the value of its business in terms of sales and assets, rather than actual experience and understanding of the derivative product, which in reality few purchasers of derivatives (and their local bank manager or accountant) have.

This calls for a qualitative and not quantitative assessment of "sophistication" to establish entitlement to compensation.