A major injustice has been suffered by thousands of owners of small businesses across the UK who have been mis-sold Interest Rate Swap Agreements (IRSAs) by their banks (otherwise known as business swap loans).
Businesses have complained that IRSAs, which were designed to insure borrowers against steep rises in interest rates, left them swamped by huge penalties after interest rates were slashed to record lows in the wake of the financial crisis.
The Financial Services Authority(FSA) has found that there were “serious failings” in the sale of IRSAs. Most IRSA’s were sold between 2005 and 2008 but investigations can take place as far back as 2001.
IRSAs are complex products, which banks sold to businesses alongside loans to protect them against rises in interest rates, in anticipation of interest rates going up. However, IRSAs caused severe problems for businesses when interest rates subsequently went down, and the FSA believes that banks did not do an adequate job of warning customers about the risks of IRSAs in the event of interest rates dropping. It was also discovered that in some cases borrowers had been pressurised to sign up or told that the interest swaps were obligatory or made them more likely to succeed in their applications.
Once locked in to these costly agreements, many small firms were unable to escape, as exit costs – which in some cases reached £1m – would be enough to bankrupt them. It has been found that one company went out of business after being charged interest amounting to more than twice the original loan amount – a £3m loan racked up an extra £6.1m to pay back.
- Around 28,000 IRSAs have been mis-sold by the banks.
- The products have poor disclosure of any exit costs.
- Customers were not made fully aware of the risks they were taking on with the IRSAs.
- The sales staff giving professional advice were not regulated or qualified to do so.
- Loans were “over-hedged”, where the amounts and or duration did not match the underlying loan.
- Rewards and incentives were given to staff for selling the loans.
We are authorised and regulated by the Solicitors Regulation Authority and we possess an excellent track record in recovering compensation in many legal issues from contract disputes to financial mis-selling of insurance products and services. For more information please visit our website www.iamhappi.com or Contact Us for further advice on Interest Rate Swap Agreements.
No Win, No Fee, No Worry, Service
We are confident to offer you a legal service that we are prepared, given the right facts, to offer our clients a no win, no fee, service to claim compensation for mis-sold business interest rate swaps. In short, if you lost your case against the bank and we obtain litigation insurance, you will not have to pay for any costs as the litigation insurance pays the banks legal costs. If you win, you are likely to recover all or the vast majority of your legal costs from the bank. In most cases, win or lose you often do not have to pay a penny.
If court action is not right for you, the Financial Service Authority has provided a free service to make a claim, but you must make a claim yourself. Alternativiely for a fee of 25% plus vat, we would be able to represent you make a claim through the scheme under a no win no fee service. Thus if you fail in your claim under the scheme, you pay us nothing; if you win, you pay us 25% of the financial benefit of the claim plus vat.
Without fear or favour, conflict or prejudice we are equipped to take action on your behalf.
If you are a small to medium size business that has been mis-sold a business loan with swap interest rate product please do not hesitate toCONTACT USto see if you have a claim for compensation.