Setting off for insolvency

• More claims centred on GRG’s alleged activities are likely.
• Insolvency set-off protects the banks’ position.

The banking crisis in 2008 has led to many claims being pursued against banks for the “mis-selling” of interest rate hedging products, frequently interest rate swaps. The claimants are companies that were persuaded to enter into these transactions. Frequently, having swapped a floating rate of interest for a high fixed rate of interest, those companies have been forced into liquidation. They could not afford to maintain the payments to the bank as interest rates have plummeted and remain at very low levels. A redress scheme was introduced under the auspices of the Financial Conduct Authority (FCA) in 2013 to compensate those found to have been “mis-sold” an interest rate hedging product. The FCA estimates that there are 2,000 insolvent estates with “mis-selling” claims.