Barclay’s admission of Libor-fixing means any interest rate swaps should be void, claims care home

Published: 20/12/2012

Lawyers representing Guardian Care Homes in its interest rate swaps mis-selling case against Barclays have argued that the lender’s own admission of Libor-fixing earlier this year means any interest rate derivatives sold by the bank should be void.

This case is the first of its kind to reach the High Court; Graisely Properties Limited, a group of nursing homes who fall under the umbrella company Guardian Care Homes Group, is seeking up to £38 million after being sold swap and collar derivative products by high street lender, Barclays, which had been based on the reported Libor rate.

The lender has refuted the claim, asserting the company was “well advised, “knew the downsides of the products” and had sufficient “market sophistication” to understand the product it was being sold.

Interest rate swaps are highly complex financial products, designed to protect businesses against rising interest rates. However the Financial Services Authority (FSA) has found serious failings in the sales practice of these products, which were originally devised for trading between financial institutions and much bigger corporations typically with their own, highly experienced trading teams.

Grant Hartland is the Chief Executive of Guardian and has dismissed Barclays’ defence claiming the lenders failed to “explain the real circumstances behind what went on”. He went on to say:

“There was no one to go to get advice on these complicated transactions. Barclays has been less than honest about the way swaps were sold.”

Content correct at time of publication