Leading law firm Stephensons Solicitors LLP has settled a number of interest rate swap hedging claims on behalf of small businesses who were mis-sold the products.
The law firm has settled cases in the last two weeks in relation to the multi-million pound mis-selling of interest rate swap loans. It’s thought that tens of thousands of businesses could have been mis-sold an interest rate swap product which was not suited to their individual requirements. Stephensons is acting for many affected businesses.
Leanne Millhouse, a commercial litigation solicitor at Stephensons, said: “We have been assisting a number of business owners who have been mis-sold interest rate hedging products. We are pleased to report that the banks are now providing offers of redress and our clients have been so far happy to accept these.
“Our experience so far shows that the banks are settling claims for direct losses first – such as additional interest costs and/or breakage costs - as a result of the mis-sell of the hedging product. The banks are also paying interest on these losses at the rate of 8% a year. After settling direct losses the banks will consider claims for consequential losses and we are currently assisting our clients with consequential loss claims.”
The customers who were sold these products ranged from care home operators, hoteliers, chemists, vets, hauliers, small property developers and pub owners. These customers were advised by the banks to hedge the possibility of interest rates increasing when also taking out a loan with the bank. In fact, the banks made it a condition of the loan to require a hedging product. As a result, many customers were faced with crippling monthly repayments when the interest rates fell and also unreasonably high exits fees should the customer wish to terminate the hedging product.
The Financial Conduct Authority highlighted their concerns over the mis-selling of interest rate swap products to small to medium sized businesses who were ‘non-sophisticated customers’ over 18 months ago. The FCA came to an agreement with four banks – RBS, Barclays, Lloyds and HSBC – that these banks would review their past sales and offer fair and reasonable redress to these customers.
Leanne added: “Customers should also remember that if they are unhappy with the compensation offered, or indeed if no compensation is offered, they only have six years from the date the hedging product was entered into to bring a claim in the courts.”