Large numbers of businesses, farmers and landowners in the Westcountry may have been affected by the sale of controversial interest rate swaps, according to one regional legal firm.
Stephens Scown LLP, which has offices in Exeter, Truro and St Austell, says it is already acting for one farming partnership in Cornwall to secure substantial damages from the mis-selling of the complex financial derivative.
Many businesses have entered into interest rate swap agreements in recent years when looking to secure a conventional loan or other form of funding from the bank. The agreements were intended to protect people from increases in interest rates; however, many were mis-sold.
Mark Stubbs, partner and civil litigation lawyer for Stephens Scown based inTruro, says, “Lots of people were ‘persuaded’ to enter into these types of complex financial agreements when they really didn’t need them and I fear that this is just the tip of the iceberg in the South West. It appears that farm owners, in particular, may have unwittingly been the victim of these mis-sold derivatives and I’m concerned there will be many others who will have been hit hard.
“These financial derivative products are highly complicated, and they weren’t always explained properly by the lenders, nor was the suitability of the customer adequately assessed. On a number of occasions, banks also failed to explain the cost of terminating the swap arrangement, which on substantial loans could amount to significant six-figure sums.”
Anyone who has entered into an interest swap agreement is able to bring a complaint against the bank through the Financial Ombudsman Service, or alternatively negotiate direct with the bank and/or issue court proceedings. There has been significant press coverage of these deals recently, and it is thought that a number of cases have been resolved out of court.
He says, “There are regulations around the steps that banks should have taken before allowing a small business to enter into one of these arrangements. Often these steps, which were supposed to protect consumers, were not complied with.”
Mark adds, “It is time for anyone who took out an interest rate swap agreement to get legal advice. A qualified solicitor will be able to see whether or not they have recourse against the banks, either to terminate the swap arrangement or alternatively to obtain damages for negligence and/or breach of contract.”
However, there are strict time limits which apply, as Mark explains, “Anyone who feels that they have entered into an arrangement which is a significant disadvantage to them should get the advice of a solicitor as soon as possible. We are offering a free consultation to anyone who is interested in investigating such a claim.”