Anyone who may have been mis-sold an interest rate swap should take their own legal advice as soon as possible and not trust the banks simply to hand over compensation.
The warning has come from national law firm Goldsmith Williams, which says that a worrying picture of banks ‘hard-balling’ customers is emerging.
Its warning follows an FSA report into interest rate swap mis-selling by four major banks. The report found that in a sample of 173 cases, mis-selling had occurred in over 90% of cases.
Interest rate swaps were sold on the basis of a rising market and these hedging products were designed to protect small businesses, including shops, take-away food firms, small developers and buy-to-let landlords, from rising interest rates. It appears that lenders failed to provide a full explanation of the associated risks and therefore mis-sold products.
However, in its announcement relating to its own findings, the FSA used the words ‘non sophisticated’ to describe customers who had been victims of mis-selling.
It did not define what it meant by the term, but the words have prompted speculation that customers deemed to be ‘sophisticated’ would not get compensation. Sceptics say the word ‘sophisticated’ could be applied to anyone running a business, buying building sites or buying and doing up properties for investment purposes.â?¨
Simon Cottrell, senior partner at Goldsmith Williams, said: “Whilst the headline findings of the FSA review appear to be positive, the detail underneath this is by no means as favourable.
“So far, the banks appear to be hard-balling customers and the result is that these reviews could prove to be a little like putting the wolves in charge of the sheep.
“The public needs to have confidence that this review process is robust and not just paying lip service. Our experience so far is that there is a danger that this is going to turn out to be a tick-box exercise.
“This feeling is heightened when you consider the published figures for bank provisions for interest rate swap mis-selling cases which do not seem anywhere near substantial enough.
“In our view, for those caught up in this scandal the best way to gain access to justice and secure compensation is to seek legal representation.
“And time is of the essence – the statute of limitations will start to impact on the claims of some of these businesses. Anyone affected should instruct a lawyer immediately.”