Interest swap rates is a “gamble” by the bank and the business owner on whether 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 (for 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 loan, a gamble. The swap loan was sold on the basis that it was simply a fixed loan, like a fixed mortgage.
Unfortunately, a substantial amount of hardworking, business owners have become victims of this scandal. We would advise small to medium sized business owners to check any financial products they have attached to their mortgages or loans as they could be paying crippling financial costs.
The Financial Services Authority (FSA) has found that there were “serious failings” in the sale of Interest rate swaps, and most of these products were mis-sold between 2005 and 2008 but investigations can take place as far back as 2001.
There has been approximately 200,000 interest rate swaps sold to small to medium-sized businesses (SMEs) in the UK over the last five to ten years.
There are approximately 57,000 pubs in the UK (not including restaurants), with a large amount of these being family owned, it is likely that many business owners have entered into an interest rate swap or hedge without being aware of it.
Many hard working, decent and dedicated business owners have faced financial ruin, stress and ill-health as a result of the mis-selling of interest swap loans. Some business owners are struggling to pay the swap payments every moth in addition to their loan repayments but because of the exit fees, they are unable to sell their pubs, restaurants or properties.
If you are a small to medium-sized business owner who believes that they have been mis-sold a swap interest rate product please do not hestitate to Contact Us to see if you have a claim for compensation.