interest rate swap mis selling

Interest Rate Swap Mis-selling Background Interest rate swaps were actively marketed by retail banks to their small and medium sized business customers from around 2005 to 2007 and proved extremely profitable for the banks. Businesses were pressured and/or forced to believe they had no other option by their Banks to enter into interest rate swaps, sometimes as a condition precedent in loan agreements. These products were sold as the ideal protection product guarding against interest rate rises and the financial difficulties a rise could have on a small/medium sized business. Interest rates however fell to record lows from late 2008 onwards leaving clients paying for an unsuitable product and suffering in the vast majority of instances, irretrievable financial consequences of the swap itself. There is clear evidence that interest rate swaps were mis-sold by well known high street banks to small and medium enterprises. Stellar Law act for clients mis-sold ‘swaps’ and pursue those lenders in order to resolve the financial impact it has had on our clients of such mis-selling. We act for clients that were mis-sold various types of swaps including LIBOR swaps, Base rate swaps, Interest rate caps and Base rate collars swaps. Banks have a duty of care to ensure when selling financial products that they provide a full explanation of the effects and potential risks of the product. This duty of care is even more relevant with the type and/or class of the customer. Lenders are required to make sure the product is suitable for the client. The banks are obliged to follow these principles and rules as stated by the Financial Services Authority which are set out in the Conduct of Business Sourcebook (COBS). In many of these sales, the banks breached this duty of care by: (i) not explaining to their customers the possible detrimental effects of the interest rate swap and the associated risks together with (ii) failing to consider that an interest rate swap may well not be the most suitable product for their client. If you believe you have been mis-sold a ‘swap’ there are a number of options, including negotiating with the bank, making a formal complaint to the Financial Ombudsman Service (FOS) and issuing proceedings and litigation against the bank. We are not a claims management company, therefore our remit allows us to not only complain to the FOS, but also issue legal claims and represent our clients at Court. The initial step would be to attempt to negotiate with the bank and reach an agreement on the loan and repayments. We’ll consider the facts of your case before preparing a detailed pre-action letter of claim to start off the negotiations with the bank. If the bank is not prepared to negotiate then litigation will be considered to take matters further on your behalf. We’ll consider the most appropriate strategy in which to recover your losses whether that’s direct litigation or making a formal complaint to the Financial Ombudsman Service which can obtain compensation of up to £150,000. Swaps are a complex subject which most lawyers will not be familiar with or understand to a level adequate enough to recognize Interest Rate Swap mis-selling claim. We specialize in this field and have vast experience in both financial services regulatory auditing and in litigation against banks.