Mis-sold Interest Rate Swaps

Was your cap and collar deal really an informed choice?

Britain‘s leading lenders didn’t just pick on the unsuspecting general public during their heady mis-selling spree. Thousands of business customers have been discovering that the interest rate protection product they were sold by their bank as a ‘sensible precaution’ has turned into a nightmare that is now financially crippling their businesses.

Some of the stories of interest rate hedging mis-selling are downright disturbing, with one major bank going so far as to include a gagging clause in their contract to prevent clients from talking to the regulator about the product. What kind of mainstream financial product requires a gagging clause?!

These products were specifically designed to be difficult to comprehend, difficult to get out of, and to greatly favour the lender.

What to do next:

In the first instance we recommend that you call us on 0845 500 9400 for a free, no-obligation conversation about the specific circumstances surrounding the product you were sold. We will probably be on the phone for 10-15 minutes.

We will then be able to talk you through what we believe we can do to help you to:

• Get out of your current situation
• Recover your losses to date

Why it is essential to claim soon...

Time barring of a claim is a real concern with these products as the lender is likely to claim a limit of 6 years from the date of sale. Given that most of these products were sold between 2006 and 2008 it is important to lodge your claim before it is too late.

What exactly are interest rate swaps?

Technically speaking they are a form of ‘derivative’. Typically they were sold on the stated basis that if interest rates continued to rise above a certain point (they had climbed to 5.5% in the latter part of 2008) then you would be protected from the effects of that. It may have been suggested to you by the bank that interest rates were in fact likely to continue to rise for some time.

What may not have been suggested was the effect if interest rates fell considerably - which of course they did, to a historic low of 0.5%.

Some things that may or may not have been explained to you, and may or may not be in your contract depending on your lender include:

• The penalty charges that occur if interest rates fall below a certain point. In some cases the further the interest rate fell the more you ended up paying...
• The get-out clauses for the bank which meant if interest rates rose above a certain point they could cancel the deal (surely the whole point of the protection...)
• The fact that the charges for the interest rate protection would continue to be based on the original loan value even if you had paid a substantial proportion back.
• The substantial (as much as 50% of the original loan) break costs involved should you wish to get out of the deal.

Call us on 0845 500 9400 to see if you have a case

These deals were often rigged hugely in favour of the banks, and set up without you being in a position to make a truly informed choice. They often simply weren’t fair (directly violating the financial COBS rules).

Don’t let them get away with it - your business needs this money a lot more than a lender who took it by mis-selling.