Are interest rate swap clients now being mis sold redress?
After wrongly selling interest rate swaps to thousands and small and medium businesses, there are now questions being asked about the way in which lenders are ‘repaying’ those affected.
It is now over two weeks since the Financial Services Authority deadline for the settlement of all swap claims has passed and many businesses remain uncompensated.
Yet this now appears to be the least of businesses worries an investigation by Times revealed ‘evidence of a flawed but legal mechanism in the regulator’s scheme that allows banks to cut compensation awards to their customers by tens or even hundreds of thousands of pounds.’
Instead of providing monetary compensation lenders are being allowed to substitute the mis sold swap for another swap product. In one example highlighted in The Times, a former businessman provided documentation demonstrating how one lender capitalised on this. His compensation was cut to zero and the new hedge was more expensive.
Simon Cottrell, Senior Partner at Goldsmith Williams Solicitors, is outraged:
“The whole premise of the FCA review scheme relied on the goodwill of the banks. Many were sceptical at this; after all why would you choose to trust someone to remedy a situation that they caused in the first place.
“Despite all reservations businesses were led to believe their best interests were at the forefront of the scheme, with buzz words like ‘independent reviewer’ thrown around to demonstrate its sincerity. At no point were businesses encouraged by the FCA or lenders to seek legal advice.
“Now it appears us sceptics were right; instead of being offered the cost of the swap businesses are being offered a new hedge. In essence businesses are being forced to swap their swap for another swap. Confused? That’s what the banks have preyed on throughout this whole debacle.
“The rate we are going we are to have a mis selling scandal on top of a mis selling scandal.”
If you have been mis sold an interest rate swap or have been told by your lender you must forgo compensation for another hedge or swap, contact Goldsmith Williams immediately to see what your legal options are.