header-logo header-logo

A consequential loss

12 September 2013 / Charles Lazarevic
Issue: 7575 / Categories: Features , Expert Witness , Profession
printer mail-detail

Could mis-selling in the derivatives market be the PPI equivalent for small businesses? Charles Lazarevic reports

Recently it has been suggested that the banks face claims in excess of £10bn as a result of the alleged mis-selling of complex interest rate derivatives. I have dealt with several cases where the consequences of these “swap” charges have been devastating on the business, with significant losses to the business-owners in some cases.

How has this situation arisen?

The Financial Conduct Authority (FCA), previously the Financial Services Authority, has conducted a review into the interest rate hedging products banks sold to businesses as a means of managing fluctuations in interest rates, also known as interest rate swap agreements (IRSAs). In the review, the FCA identified four broad categories of IRSAs sold: swaps, caps, collars, and “structured collars”. Some of the more complex products, particularly structured collars, speculated on interest rates and resulted in customers paying much more when the interest base rate fell below an agreed level, for no apparent benefit to the business. The FCA decided

If you are not a subscriber, subscribe now to read this content
If you are already a subscriber sign in
...or Register for two weeks' free access to subscriber content

MOVERS & SHAKERS

DWF—19 appointments

DWF—19 appointments

Belfast team bolstered by three senior hires and 16 further appointments

Cadwalader—Andro Atlaga

Cadwalader—Andro Atlaga

Firm strengthens leveraged finance team with London partner hire

Knights—Ella Dodgson & Rebecca Laffan

Knights—Ella Dodgson & Rebecca Laffan

Double hire marks launch of family team in Leeds

NEWS
Charles Pigott of Mills & Reeve reports on Haynes v Thomson, the first judicial application of the Supreme Court’s For Women Scotland ruling in a discrimination claim, in this week's NLJ
Charlie Mercer and Astrid Gillam of Stewarts crunch the numbers on civil fraud claims in the English courts, in this week's NLJ. New data shows civil fraud claims rising steadily since 2014, with the King’s Bench Division overtaking the Commercial Court as the forum of choice for lower-value disputes
The Supreme Court issued a landmark judgment in July that overturned the convictions of Tom Hayes and Carlo Palombo, once poster boys of the Libor and Euribor scandal. In NLJ this week, Neil Swift of Peters & Peters considers what the ruling means for financial law enforcement
Small law firms want to embrace technology but feel lost in a maze of jargon, costs and compliance fears, writes Aisling O’Connell of the Solicitors Regulation Authority in this week's NLJ
Artificial intelligence may be revolutionising the law, but its misuse could wreck cases and careers, warns Clare Arthurs of Penningtons Manches Cooper in this week's NLJ
back-to-top-scroll