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The results were startling, with the FSA declaring that, in 90% of the cases it had reviewed, it found sales of these products did not comply with its regulatory requirements.

The FSA agreed with the banks involved that a review of the manner of the sale should be undertaken and, where appropriate, redress made to the customer.

What is an Interest Rate Swap?

An Interest Rate Swap was often sold to a customer alongside, and often as a condition of, a loan. The basic idea was to provide a fixed rate of interest for repayment of the loan, and they were introduced as a protection against rising interest rates.

However, customers were often not informed of the consequences of any drop in interest rates and the penalties for exiting the agreements early.

The Bank of England has now held interest rates at a historic low of 0.5% for an unprecedented period of time. This has meant that during a period of historically low interest rates, customers who entered into Interest Rate Swaps have not been able to take advantage of the low rate.

Many SMEs are now struggling to maintain monthly payments under the Interest Rate Swaps in the face of a different financial climate. Where customers that took out these agreements have tried to exit them early, they have been told they will have to pay large cancellation fees, something many say they were never told the magnitude of when entering into the agreement.

Types of Interest Rate Swaps?

There are four main types of Interest Rate Swaps:

  • Swaps – which enabled the customer to fix an interest rate
  • Caps – which placed a maximum cap on the interest rate, but allowed the customer to benefit from low interest rates
  • Collars – enabled customers to cap interest rates within a simple range
  • Structured collars – like collars, but with a more complex set of arrangements if base rates fell below a set limit

Which Banks are involved?

The initial FSA investigation related to Interest Rate Swaps sold by the big four high street banks:

  • Barclays,
  • HSBC,
  • RBS and
  • Lloyds Banking Group

What now?

The FSA have agreed with the banks that the banks will conduct a full case by case review of the sale of Interest Rate Swaps to SMEs and individuals.

If you think you have been mis-sold an Interest Rate Swap contact us to discuss having your case reviewed and other options available to you.

What information do we need from you?

The FCA investigation found that in up to 90% of the cases it initially reviewed, Interest Rate Swaps had been mis-sold to customers.

The FCA found there were “serious failings” by a number of high street Banks in the sale of these agreements. In particular the FCA raised concerns about:

  1. The inappropriate sale of more complex varieties of interest rate swaps
  2. A number of poor sales practices used in selling interest rate swaps
  3. Lack of information given to the borrower
  4. Making the Interest Rate Swap a condition of other finance/borrowing.

Update

The Court of Appeal has just granted WW Property Investments Limited permission to appeal a decision made by His Honour Judge Kaye QC. This case is likely to be conjoined with the case of CGL Group Limited v The Royal Bank of Scotland and NatWest which we are dealing with and which is due to be heard by the Court of Appeal on 20 and 21 June 2017. His Honour Judge Kaye’s decision was to strike out the entirety of WW’s claim against NatWest and refuse WW permission to add a new claim. The Judges in the Court of Appeal granted WW permission to appeal because they considered arguments around LIBOR manipulation and the negligent conduct of the IRHP review scheme to be arguable.

This case represents welcome news for those customers who were mis-sold interest rate derivatives and were short-changed by inadequate offers in the IRHP review redress and consequential loss offers from major high street banks such as RBS, NatWest, Barclays and Lloyds. The CGL case that we are dealing with has been widely reported in this area.

We are here to help you set out your claim against the Bank, but to do so we need a little assistance from you!

Businesses need to gather together all the relevant information and documentation provided by the Bank in the period leading up to taking out the Interest Rate Swap. This information is vital to your claim and demonstrating whether or not you were mis-sold an Interest Rate Swap.

Information will include what you were verbally told by the Bank as well as letters, emails and any signed agreements.

There are various grounds on which your claim could be based, and some of these will depend on the size of your business and the extent of the “advice” you were given by the Bank. We will discuss these with you at the start of your claim.

Depending on a number of factors we can advise and assist you in the progression of your claim for redress through the FCA approved review, taking a claim to the Financial Ombudsman or commencing a claim in the Courts. We will advise you on the most appropriate course of action for you and your business.

The most important thing is to act quickly as there are time limits within which any claim in the courts must be made. Contact us as soon as possible to discuss your case and see how we can help you obtain redress.

We know that your business has already incurred a heavy financial burden as a result of Interest Rate Swaps. We therefore offer an initial assessment and can discuss with you various funding options, including “no win no fee” agreements.

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Our Approach & Our Experience

Myerson is rated a “Top Tier” firm in the Legal 500, and we are highly regarded in our practice areas. We offer our clients a fresh perspective and are here to help you and your business.

We have a complete understanding of the legal framework of your potential claim, including the regulatory, contractual and common law breaches involved.

We are aware there are many firms offering this service, but we believe we stand apart as we can offer you transparent, clear and concise legal advice backed by our commitment to our clients.

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Our Promise & Core Values

Our Promise

The Myerson Promise - Our Partners, team of lawyers and support staff commit to giving our clients more.

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To always give you clear, jargon-free advice.
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To be completely transparent about our fees from the outset.
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Progress every matter in an efficient and timely matter.

Our Core Values

Our core values are at the centre of everything we do.

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We are always professional but ensure that we are friendly and approachable.
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We are determined and enthusiastic about supporting our clients and our people.
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We willingly take responsibility and can be relied on to be commercial, effective and efficient.

Meet Our In-House Specialists

We offer a range of specialist legal services tailored to meet the needs of our varied clients.

Jonathan Hassall

Jonathan Hassall

Jonathan is a Partner in our Commercial Litigation department

Vicky Biggs

Vicky Biggs

Vicky is a Senior Solicitor in our Commercial Litigation department

Robert Brothers

Robert Brothers

Robert is a Solicitor in our Commercial Litigation department

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0161-941-4000