Following last week’s announcement from the Financial Services Authority (FSA), it seems that the debate regarding the mis-selling of financial products from our high-street banks is far from over.
Indeed in the wake of the continuing saga regarding PPI Claims, the mis-selling of Interest Rate Swaps (IRS) also known as Hedge Products, seems set to be the next big thing.
The announcement from the FSA follows a pilot review on the sale of a number of such Hedge Products, a review which discovered that over 90% of sales made by our Banks did not comply with at least one regulatory requirement. As a result Britain’s biggest banks are now set to carry out a full review as to the extent of the mis-selling of Interest Rate Swap (IRS) products to small businesses.
Whilst it may well be the case (and time will tell) that the Banks will be found liable in huge numbers, a recent case that came before the High Court in Manchester should perhaps offer a note of caution.
The case related to the alleged mis-selling of an “Interest Rate Swap” in 2005. The case came before the Court some seven years later, however apart from the swap documents, there was little paperwork or written communications that were relevant. As such the case mostly turned upon the oral evidence of the individuals concerned, namely the parties who were bringing the claim and two representatives of the Bank.
The issues in the claim will perhaps be common to many; issues concerning termination or ‘break’ costs, advice regarding the swap ‘margins’, whether the loans could be portable, and whether any negligent advice was given to the claimants by the representatives of the Bank.
There is no doubt that the case was highly fact sensitive and in the main it turned on what was said or not said at a meeting some seven years earlier, and the witnesses recollection of such events. On all key points the Bank’s position found favour with the Judge. In this case and on the facts the Bank was completely vindicated.
In the light of such a case, it seems that despite the agreement with the FSA, the banks are not going down without a fight. Therefore, if you are considering making an IRS compensation claim, just how do you maximise your chances of success?
Due to the complexity of these claims and the seeming reluctance of some banks to offer full redress, legal action is increasingly being seen by many SME business owners as the best way to reach a satisfactory settlement.