Last night’s Panarama programme on the BBC looked at the bank scandal involving the complicated mis-selling of interest rate swop products. The products were designed to protect borrowers against the effects of interest rates rising. It is understood that bank staff forced many small business borrowers to take the product as a condition of their loan being granted. The complicated nature of the product was beyond the comprehension of many bank staff and customers alike giving rise to claims they were ‘mis sold’. When interest rates dropped to 0.5% customer’s payments increased rather than decreased because of the interest rate swop product. Most deals had hefty penalty charges, often 5 or 6 figure sums, to exit the arrangements. It was win-win for the banks at a time when small businesses were struggling the most.
Despite intervention from the FSA and some court rulings on the subject it is reported that only 32 businesses have received compensation to date. This suggests that the banks are dragging their heels in agreeing compensation with their customers.
If your business has been affected by these products and you have not been contacted already by your bank to confirm a review of your situation you must act quickly. Most of these products were sold between 2005-2008 and the limitation period for bringing a claim through the Courts is 6 years, if an acceptable settlement cannot be brokered with the bank direct. You must ensure you take swift action otherwise your claim could be time barred for limitation leaving you without the compensation your business deserves.