Financial Misselling and Interest Rate Swaps

5 simple questions:

1) Have you entered into an Interest Rate Swap, hedging or capped agreement?

2) If so, have you been made fully aware as to your obligations under the agreement?

3) How much it is costing you or affecting the profitability of your business? 

4) Are you aware of the implications of the FSA’s recent announcements and how to place yourself or your company in as strong a position as possible? 

5) Do you know what the re-financing costs or break fees are likely to be? 

Interest Rate Swap Agreements involve complex financial products which have been mis-sold by the major high street banks to Small & Medium Enterprises (“SMEs”) for over 10 years.

Under the Interest Rate Swap Arrangements, many SMEs are now facing huge payments which they must continue to pay for the full term of the Swap contract, despite the changes in the economic climate.

In a similar way to the PPI mis-selling scandal, products sold to SMEs as protection are crippling businesses who are now looking to exit the arrangements.

What many businesses discover is that there are and discover significant exit or cancellation fees payable, which can add up to around 50% of the original loan.

This usually becomes apparent when the underlying loans are paid off and the businesses – who believe that they are debt free – find themselves with two separate agreements (1) a loan and (2) a swap contract. This creates a situation where the SME must continue to make payments under the swap agreement, even if they have repaid their loan.

We would always suggest that taking advice from a qualified solicitor is necessary with all hedging products due to their inherently complex nature and Gregory AbramsDavidson’s Financial Mis-Selling team is here to help.

Whether or not you wish to use a solicitor, we would always advise that before contacting your bank about the matter, it is important to be aware of the full extent of your losses. This will provide the basis for the level of compensation to which you may be entitled. Do not understate or underestimate your claim when preparing your complaint.

The Financial Mis-selling team at Gregory Abrams Davidson LLP are experienced in these matters and have the financial and legal expertise to review your mis-selling matter, and assist you in preparing your complaint to your bank. You should be aware that it is crucial to get it right first time around.

How can Gregory Abrams Davidson LLP help you or your business? 

At GAD, we are acting for a number of clients who believe that they have been mis-sold financial products including Interest Rate Swaps. Our specialist Financial Misselling departing fully understand the sensitivity of the commercial issues, where continuation of the banking relationship through a negotiated settlement may be in our client’s best interests. We also recognise, however, that there may be a need to resort to litigation, which would be used to improve a your or your business’s bargaining position.

In terms of costs, GAD would discuss all available options with you and your business in order to reach the most favourable means of proceeding with your matter.

We would urge clients to act sooner rather than later, due to the current media attention. With interest rates at a low point, businesses should be looking to take advantage of any possibility to be placed in a stronger position, which would surely make a difference to the bottom line and their survival and growth.

If you would like to find out more about financial misselling, hedging products or interest rate swaps or any other issue mentioned in the above article as it is relevant to you or your business, especially if you feel that you may have a case, then please call Ciaran Montague now on 0151 236 5000 or email