Interest rate swaps mis-selling case awaiting verdict

Published: 28/11/2012

With the interest rate swaps mis-selling scandal heating up, the industry waits for the outcome of the case between Graiseley Properties Limited and Barclays Bank PLC.

The group of nursing homes, which comes under the umbrella of Britain’s Guardian Care Group, filed its lawsuit against Barclays in April this year and is seeking up to £38 million after being sold swap and collar derivative products which had been based on the reported Libor rate.

Interest rate swaps were sold to thousands of small and medium enterprises (SMEs) to protect them against rising interest rates. The majority of highly complex financial products were sold during the boom of 2005 to 2008 where interest rate increases were of frequent concern.

However it has since been discovered that lenders knowingly sold the product on the pretext of a rising market when they were fully aware that interest rates would soon drop, something which is particularly noteworthy in this case; the claimant is alleging Barclays falsely and fraudulently misrepresented the Libor rates.

The outcome of this case could offer some insight into the possibilities of success of other claims for mis-sold interest rate swaps.

Content correct at time of publication