Despite some progress being made under the FCA’s review of Interest Rate Hedging Products, or IRHPs, that were sold to SMEs by the high street banks between 2001 to 2013, the findings of recent court cases in relation to their sale will be disappointing for those SMEs who continue to suffer in the mis-selling aftermath. The outcome of a recent case involving Kent-based Crestsign and NatWest/RBS only emphasises the significance of businesses obtaining legal advice as they progress through the Review process, even if they may have already received a basic redress offer.
In a recent ruling1, the High Court found that the “small print” contained in the banks’ standard documentation was enough to prevent the banks being found liable. Despite the Judge in the case commenting that an employee of the banks’ Global Banking and Markets Unit was “at times, evasive” under questioning and that the evidence given was “not always frank”, he found that the banks did not provide misleading information or negligent advice, and successfully excluded any duty not to do so. In fact, the judge went so far as to say that if he were to only consider telephone conversations, meetings and email exchanges between the banks and Crestsign, without reference to the ‘small print’, he would “readily conclude” that the banks had indeed given advice to Crestsign and not merely information. It is anticipated that Crestsign will appeal the judgment, led by Ian Parker, Director of Crestsign and also of Ordinary People in Business Limited, the company behind the campaign group, ‘Bully- Banks’.
Most SMEs will by now have received a basic redress determination; the banks are now doing all they can to limit their exposure by offering “a swap for swap”. This is done by offering to substitute the original swap products for ‘marginally better’ swap products with lower fixed rates/shorter terms, and making nominal offers of consequential loss, which are based on an apparent policy decision to limit their exposure. The reasons being put forward by the banks as to why they are rejecting consequential loss claims are founded on arguments which would not stand up in Court; our experience is that basic redress decisions can be challenged successfully and strong arguments made to the banks for them to re-consider the consequential loss offers they have made.
Taylors’ specialist IRHP Unit, which was set up to support SMEs adversely affected by mis-sold interest rate swap products, has acted for businesses located throughout the UK that have been adversely affected by the mis-sale of hedging products and has enjoyed great success in obtaining redress for its clients in the Financial Conduct Authority's Review. Taylors is different from the vast majority of commercial law firms in that it does not have any allegiances to the high street banks and does not sit on any of the banks’ panels, so is able to carry out an objective review of your situation and suggest a practical and resolute course of action.
So if your business has entered into an IRHP and you need help with the FCA Review or Court proceedings, or wish to make a complaint to the Financial Ombudsman Service, then please get in touch with Tony Catterall at firstname.lastname@example.org or call 01254 297940.
1. Crestsign Limited v (1) National Westminster Bank Plc (2) The Royal Bank of Scotland Plc