After a two month investigation, the FSA announced this morning that four of the main high street banks, Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland, have agreed to compensate small and medium-sized businesses for mis-selling interest rate swap products.
This is great news for SMEs. Since the new year and in particular, over the last few months, Gorvins have been working with an increasing number of clients to seek redress for businesses that mis-sold these complex financial deals.
The problem started just before the credit crunch when small and medium-sized businesses seeking finance started to be offered loans attached to deals that would apparently provide a hedge or protection against future interest rate rises. But these overly complicated financial deals were not appropriate for a large number of the customers to whom they were sold, and advice from the banks seems to have been at best inadequate and in some cases misleading.
Many businesses have been left struggling as a result of these deals. One client we are looking to assist has potentially paid a sum approaching £600k per annum as a result of this product. Another has bee quoted £75,000 to exit a similar arrangement, as well as the interest fees already paid. All are having to cope with the high repayments.
Following today’s announcement, SME’s can now seek compensation and at Gorvins we are working with clients to assist in getting a refund of the monies paid under the terms of the deal, release from the arrangement and possible return of the arrangement fee.
For more on interest rates swaps and the effect on small and medium-sized businesses listen to BBC Radio Manchester’s drive time show at 5.40 pm this afternoon when I’ll be interviewed.