- Around 28,000 swap products 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 loans.
- 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.
The FSA (The Financial Services Authority) has looked into the mis-selling of business interest swaps and considered that there may be a claim for compensation. The FSA provided a review of the interest swap loans sold to small to medium sized businesses but the four largest banks in the UK; HSBC, Barclays, Lloyds TSB and RBS. For more information, please do not hesitate to Contact Us.
What are Interest Rate Swap Loans?
Interest swap rates is a “gamble” by the bank and the business loan interest rate will rise or fall. Whilst selling these loans, banks paid more attention to the possibility of rates rising and not if they were to fall for any extended period. Over the last few years the interest rate has fallen to historic lows, meaning that businesses and individuals who bought these products (or arguably forced into buying these products), are facing crippling monthly repayments and massive costs to get themselves out of the loans.
It must be remembered that the majority of business owners mis-sold business interest rate swap loans had no idea that it was a speculative gamble. The swap loan was sold on the bases that it was simply a fixed loan, like a fixed mortgage.
The ‘protection’ against rising interest rates these products provided came with a proce; businesses had to pay more if interest rates fell. And after rates were slashed in 2008, many businesses found themselves worse off instead of better.
Bank customers who consider they may have been mis-sold these financial products should seek legal advice without delay. Banks are likely to argue that mis-selling claims are time-barred 6 years after the date of the sale of the financial product which is the subject of the compaint (or possible even earlier).
If you are a small to medium, size business that has been mis-sold a business loan with a swap interest rate product please do not hesitate to Contact Us to see if you have a claim for compensation.