Head of Gosschalks Solicitors' Corporate Department Nigel Beckwith, on interest rate swaps
A MAJOR review by the Financial Services Authority (FSA) has revealed some of the leading major high street banks have been mis-selling complex interest-rate hedging products to tens of thousands of small and medium-sized businesses, resulting in losses that could run into billions.
The policies limit the risk in interest rate fluctuations and range in complexity from straightforward "swaps" and "caps" that fix or cap the interest rate of a loan, to more complex "collars" and "structured collars".
However, the complex nature of the policies means where interest rates fall dramatically, as recently, the interest charged on the loan "rebounds" to the cap, resulting in thousands now being charged interest at a significantly higher rate.
A thorough investigation by the FSA has revealed "serious failings" in the way the banks have been selling these products. In particular, banks have been failing to ensure customers understood the risks involved. Moreover, banks have failed to disclose the substantial exit costs, which has resulted in many businesses now being forced to service loans at punitive rates of interest.
Dyson DC50i - Bagless upright vacuum cleaner - BALL Technology -...
View detailsThisi is Dyson's smallest upright vacuum cleaner with the performance of a full size upright machine. The DC50i has Dyson's most advanced cleaner head technology and 2 Tier RadialTM cyclones.
Terms: LIMITED STOCK OFFER. FREE delivery to most UK postcodes - Next working day dispatch.
Contact: 01664 491439
Valid until: Monday, May 27 2013
After months of negotiation, the FSA has now reached an agreement with ten major UK banks to halt the sale of these products and provide compensation where mis-selling has occurred.
Each bank should now notify customers who have been mis-sold products, but whether the banks will provide suitable recompense in a timely manner has yet to be seen.
Any business with these types of banking facilities that believes the facility was mis-sold should seek professional advice at the earliest opportunity to ensure a positive outcome.
Comments