“Call for inquiry into bank mis-selling scandal” – Sunday Telegraph 11th March 2012
Whilst the banking industry has abandoned its legal fight over the mis-selling of payment protection insurance (PPI) to thousands of customers a new scandal has recently been revealed by a Sunday Telegraph investigation, which found that the majority of the UK’s major banks have sold highly complex interest rate derivatives to small businesses
These are contracts that allow a customer to swap a variable interest rate loan facility for a fixed rate for a certain period. The products are commonly known as ‘swaps’ because the bank and customer exchange or ‘swap’ loan repayments. If interest rates rise, the bank covers the increase in repayments for the customer. If rates fall, the customer pays a fee back to the bank.
The record fall in interest rates has exposed many customers to the dangers inherent in such products with many now struggling to meet payments. Many customers who entered into ‘swap’ arrangements claim that the risks of low interest rates and exit fees were never explained to them before they entered into the swap. Indeed, the Financial Services Authority considers ‘swaps’ to be so complicated that they should only be sold to investment professionals who would have an understanding and appreciation of the risk involved with these very complicated products.
We continue to receive numerous enquiries from anxious business owners who feel that they have been misled by their banks into purchasing highly unsuitable and sophisticated products and we are acting on a number of claims. We believe that there has been widespread negligent mis-selling of these products by the banks to a particular body of customers and the consequences of that negligence are now being felt by the customers.
Partner and Head of Dispute Resolution
Commercial Dispute Resolution
LPatel@LawBlacks.com
0113 227 9316
@LukeLawBlacks
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Luke Patel
