A recent investigation by the Financial Services Authority (FSA) has identified that four banks – Barclays, HSBC, Lloyds and RBS – have been guilty of mis-selling complicated commercial hedged lending products to their commercial customers.
Hedged lending products include: ‘swaps’ which fix the interest rate; ‘caps’, which limit interest rate rises; ‘collars’ and ‘structured collars’, which limit interest rate fluctuations within a certain range.
The FSA found that borrowers were being sold these products on the basis that they would provide insurance or a ‘hedge’ against the risk of interest rates rises but did not advise on the risk/cost implications to those businesses of a fall in interest rates.
Interest rates have, of course, fallen dramatically since 2008, which has left many of the subscribers to these products with losses amounting to tens, and in some cases hundreds, of thousands of pounds in additional interest rate charges.
The banks have agreed to look into cases of alleged mis-selling and provide ‘fair and reasonable redress’.
However, it remains to be seen what the banks mean by ‘fair and reasonable redress’. From recent experience, even where banks are held to account, the redress offered by way of compensation does not necessarily reflect the loss or damage caused by their actions.
If you have been mis-sold a hedged lending product, you are entitled to full compensation for the loss you have suffered. It is therefore important that you seek specialist legal advice on your case without delay.
Unlike the claims companies who are offering to take these cases on in return for a significant percentage of the compensation received, we at Harrison Drury understand how these hedged lending products operate and we have the technical and legal expertise to negotiate with the banks and to take the matter to court if necessary. We are also in a position to ensure that our costs are recovered from the banks directly and not from any compensation award.
If you believe that you or your company has been the victim of the mis-selling of one of these products and would like to discuss your claim further on a no-obligation basis please get in touch by e-mailing Colin.Fenny@harrison-drury.com or call me on 01772 258321.