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Property Alliance Group v RBS – High Court Rejects PAG’s Claims – Summary

In the first major case regarding LIBOR manipulation and interest rate derivative products, the High Court has dismissed Property Alliance Group’s (PAG) claims against the Royal Bank of Scotland (RBS).

Background Facts

PAG is a property investment and development business.  RBS was the principal provider of PAG’s commercial banking services.  PAG commenced Court proceedings against RBS in September 2013.  The Court proceedings arose from four interest rate derivative swap products which RBS had sold to PAG between 2004 and 2008.  Each of the swaps were linked to the GBP 3 month LIBOR rate.  RBS also provided investment facilities to PAG that were usually referenced to a margin over LIBOR.

In Spring 2010, PAG was transferred into RBS Global Restructuring Group (GRG).  In June 2011, PAG terminated the swap agreements but they incurred a break cost of £8.261 million.  At the same time, PAG agreed refinancing terms with RBS and entered into a composite facility.  When the Court proceedings were commenced in September 2013, PAG still banked with RBS and were still dealt with by the bank’s GRG.  PAG remained in GRG until they refinanced their debt with HSBC in 2015.

Property Alliance Group v RBS – High Court rejects PAG’s claims

In the first major case regarding LIBOR manipulation and interest rate derivative products, the High Court has dismissed Property Alliance Group’s (PAG) claims against the Royal Bank of Scotland (RBS).

Background Facts

PAG is a property investment and development business.  RBS was the principal provider of PAG’s commercial banking services.  PAG commenced Court proceedings against RBS in September 2013.  The Court proceedings arose from four interest rate derivative swap products which RBS had sold to PAG between 2004 and 2008.  Each of the swaps were linked to the GBP 3 month LIBOR rate.  RBS also provided investment facilities to PAG that were usually referenced to a margin over LIBOR.

In Spring 2010, PAG was transferred into RBS Global Restructuring Group (GRG).  In June 2011, PAG terminated the swap agreements but they incurred a break cost of £8.261 million.  At the same time, PAG agreed refinancing terms with RBS and entered into a composite facility.  When the Court proceedings were commenced in September 2013, PAG still banked with RBS and were still dealt with by the bank’s GRG.  PAG remained in GRG until they refinanced their debt with HSBC in 2015.

Court of Appeal grants permission in WW Property Investments case against NatWest

In welcome news for those bank customers who were mis-sold interest rate hedging products by banks such as RBS, NatWest, Barclays and Lloyds, the Court of Appeal has granted WW Property Investments (“WW”) permission to appeal the decision made by His Honour Judge Kaye QC to strike out the entirety of WW’s claim against NatWest and to refuse WW permission to add a new claim.

Forex Banking Scandal

Things don’t get any better for the banks. In the queue after PPI mis-selling and interest rate swap mis-selling, LIBOR manipulation is the latest scandal over the rigging of the foreign exchange market (Forex or FX as it is known).

FCA Review Update

We have previously posted blogs on the up to date position with regard the FCA review for interest swap mis-spelling. The Review is ongoing and we still have clients contacting us once they receive correspondence from the Bank.

It might be  helpful to know that HMRC has issued guidance about the tax treatment of Interest Rate Hedging Product redress.

The review so far, according to the FCA website:

Another crisis for the banks

Increased turmoil for the UK Banks last week as a further investigation was announced by the Competition and Markets Authority (CMA). This will involve an in-depth market investigation into the personal current account and SME retail banking sectors.

March 2014 – Interest Rate Swap Mis-selling Update

The market regulator, the Financial Conduct Authority (FCA) has just revealed that only 10% of the potential 30,000 to 40,000 British companies have accepted redress offers for being allegedly miss-sold complex interest rate swap agreements.

It has been reported that as at the end of last month (February 2014) the biggest banks have agreed to pay customers £483million (compared to £300million the month before).  It is believed that this relates to roughly 3,400 businesses.

Interest Rate Swap Mis-selling – An Update on the FCA Review Process

The FCA has reported latest statistics on its website on interest rate swap products and the review process.

It states that 18,700 customers have so far been invited into the review process. Of these only 2,020 matters have settled. There have been 682 instances of cases where the banks claim that no interest rate swap redress is due.

FCA Review Update

The FCA have recently reported its update on the banks’ reviews of the sale of interest rate swap products, and has announced it intends to provide monthly updates on its website.

The Review process is proving to be slow, but customers are coming out of it – the FCA reports that of 213 cases that have reached the “redress stage”, 154 have had offers for their agreements to be “torn up”, and 25 have been offered an alternative product.  As at the beginning of September 2013 only 10 customers had accepted offers made under the redress process.  That does not mean to say the other 169 have been rejected, just that they haven’t yet been accepted.

RBS Successfully Defend Interest Rate Swap Mis-Selling Claim in Court of Appeal

At a hearing on 31 July 2013, the Court of Appeal dismissed an appeal made by business partners Paul Rowley and John Green.

Messers Green and Rowley alleged they had entered into costly interest rate swap agreements with The Royal Bank of Scotland in 2005 that were consequently very costly in terms of interest payments and exit fees.

They alleged that RBS had advised them in relation to the interest rate swap agreements and that RBS had acted in breach of the FSA’s Conduct of Business Rules.

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