True extent of interest rate swap mis-selling begins to emerge
Royal Bank of Scotland (RBS) has significantly increased its provision for interest rate swaps mis-selling by 14 times its initial estimate.
RBS had originally set aside just £50 million to cover claims for mis-sold interest rate swaps. However in its annual results, published at the end of February, it was revealed that the cost of redress will in fact be in the region of £700 million.
It is also expected to incur “additional penalties” following its role in the LIBOR rigging scandal which too played an instrumental part in the mis-selling and misrepresentation of interest rate swaps.
Small and medium sized enterprises (SMEs) are being warned not to sit back and wait for compensation however, that despite lenders upping their ante the fact remains there little clarity over qualification for redress.
Simon Cottrell is the Senior Partner at Goldsmith Williams Solicitors:
“It is easy to see why SMEs would jump to the conclusion that the results of the FSA pilot scheme coupled with lenders beefing up their provision translates to automatic and adequate redress for all victims of interest rate swaps mis-selling. Sadly this is simply not true.
“Compensation levels remains shrouded in mystery; despite the FSA suggesting that a significant proportion of the pilot scheme cases are likely to be eligible for some degree of redress, it has failed to provide any transparency of what those amounts may be or indeed what constitutes ‘fair and reasonable’.
“Therefore businesses greatest chance of securing adequate compensation is to seek specialist legal representation and quickly.”
Content correct at time of publication