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Taylors Launch Mis-sold Interest Rate Swaps Unit

» Posted on: 25 May 2012

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Taylors are pleased to announce that our Commercial Disputes Team has now established a unit to support clients wishing to mount claims against banks which mis-sold interest rate swaps from 2006 onwards. The Team will be happy to hear from small and medium enterprises (“SMEs”) or their accountants, who may have been affected by interest rate swap mis-selling and wish to unravel the swap and look to recover losses from the banks.

The media and in particular, The Telegraph, have recently brought this issue into focus, following which it has emerged that businesses of all shapes and sizes are suffering as a result of interest rate swap deals they entered into unwittingly.

SMEs have no reason to be embarrassed about admitting that they did not take advice before entering into these highly complex financial instruments: the swaps are sophisticated derivative products, on which many SMEs’ regular professional advisers were unlikely to be able to give detailed advice. Interest rate swaps can theoretically be useful products giving SMEs comfort in uncertain times, but for a large number of SMEs signing up to them they were completely inappropriate.

Some banks encouraged SME’s to sign up to interest swaps during a period of predicted financial instability, allowing customers to believe that interest rates were likely to go up, as they had in previous recessions. In fact the banks’ internal predictions suggested that interest rates would decrease sharply. The profit margin for banks on these products was significant and a major contributor to the total profit made on lending transactions. Banks often failed to advise SMEs on appropriate products, alternative options, the commission they would receive or fundamentally consider whether the swap was appropriate for the particular business. The swaps have left many SME’s locked into paying a high fixed rate of interest, unable to benefit from the dramatic fall in base rates and facing huge exit fees if they want to get out of the swap. A few cases have come to Court so far but most have been settled on confidential terms, demonstrating that the banks are keen to avoid a flood of litigation similar to PPI claims. A case is soon to come to the Court of Session in Scotland and assuming it is not settled beforehand, will give SMEs a better indication of their position.

Taylors are different from the vast majority of commercial law firms in that we do not have any allegiances to the banks. We are on no “bank panels”. With our expertise we can offer SMEs a resolute and comprehensive service. If your business has entered into an interest rate swap deal and you didn’t know what you were getting into, we will be pleased to hear from you to discuss a potential action against your bank.

Please contact tony.catterall@taylors.co.uk or call 0844 8000 263.

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