“Have You Been Mis-Sold an Interest Rate Swap Agreement by the Bank? Start your Claim Now to See if You Can Get Compensation”
Where You Sold a Commercial Loan Between 2001 to 2011 Where Interest Rates Fell?
Was Your Business Below £6.5m Turnover During 2001 to 2011?
If So, We May Be Able to Help You!
What are Interest Rate Swap Agreements?
Effectively, these products were sold by the banks as an insurance against rising interest rates up to and around 2008 though they may have been sold afterwards up to 2011. The problem is the borrower was not told that these products were designed for a very different and far more sophisticated market. Although intended to help the borrower, the effect when interest rates fell was that the borrower, in most cases, incurred a penalty by having greatly increasing payments.
These products were sold primarily to high income earners and/or businesses from approximately 2001 -2011.
The products sold comprise the following:
- Interest rate caps – These products were sold as providing a ‘ceiling’ on interest rate fluctuations.
- Interest rate swaps – These products allowed the borrower to fix their interest costs so on the face of it this was attractive in a potentially rising rate market.
- Interest rate collars – In effect the ‘collar’ provided a simple range, a band if you like within which the interest rate could fluctuate.
- Structured interest rate collars – This was a variation of the ‘simple collar’ product but with no transparency on additional charges.
The interest rate swap products were designed to enable inter-banking specialists to ‘hedge’ their commercial loan interest rate risk, but when sold to the ‘borrowers’ they were simply sold as insurance policy. In practical terms, what was omitted was the fact that they exposed the borrower to significant risk if interest rates fell, which is precisely what happened, as we now know.
There were many complaints of businesses being ‘pushed to their limits’ as cash-flows were hit hard in mid-recession, sometimes forcing the closure of the business and often key property and assets being sold-off. Eventually, the Financial Conduct Authority (FCA) began an investigation into the miss-selling of these interest rate swap products.
Their findings showed considerable evidence of a number of serious and regulatory breaches that have led to a compensation scheme being forced onto the banks.
The compensation scheme is now in operation which provides an alternative to the statutory process for those customers eligible for compensation from the banks involved. The banks are only contacting those clients adjudged to be ‘unsophisticated’ and in simple terms these are borrowers who had a maximum turnover of £6.5m. These are borrowers that the FCA has agreed are ‘vulnerable and/or at risk’. The FCA, however, is under pressure to look again at this assessment process as it has been said to be unfair.
You may have been written to and offered to have your product ‘reviewed’ and if so you should ‘opt in’ immediately, but you should seek professional help, too. You may be invited to an ‘interview’ to discuss the matter further and you may be given the impression that is it an informal meeting; this is unlikely to be the case and they may well have their own specialists at hand.
If you, or your company have been adversely affected by one of these interest rate swap products then you may well be entitled to compensation due to interest rate swap mis-selling. We can provide initial advice as to the best way to manage this situation and provide access to legal, compliance and insolvency expertise, if required. You will not be charged for this advice by us.
How Would I Know that I Have Been Miss-Sold a Rate Swap if I Have Not Received a Letter from the Bank?
This is a good point. It may be that the bank has not assessed you as being an ‘unsophisticated’ borrower, but that is not to say you cannot appeal. It may also be if the company, or business failed that the bank have no forwarding address or the letter may have gone to a liquidator.
There are some key indicators which may help you such as:
- Did you take out a commercial loan between 2001-2008?
- Were you sold ‘insurance’ at the same time to cap/fix or restrict interest rate movements?
- Did the interest repayments go up as the interest rates decreased?
- Was there harsh termination penalties?
- Was your business below £6.5m turnover when you were sold the product?
What To Do Now?
If you answered ‘yes’ to any of the above questions and you would like to see if you have a claim for miss-sold interest rate agreement compensation, please contact us at your earliest convenience for free advice on the situation.
Prefer to talk? Speak with one of the team about a potentially mis-sold interest rate swap agreement by calling us on 08000 746 757 or use our live support feature at the top of the page.
Written by: Mike Smith