Gosschalks helps local businesses win SWAPs compensation
In July 2012, The Financial Services Authority (now known as the Financial Conduct Authority (FCA)), launched a major review into the mis-selling of interest rate hedging products (commonly referred to as SWAPs) by banks to small and medium sized businesses (SMEs).
These products, and the complex way in which they function when interests drop, have caused many East Yorkshire businesses to incur financial losses that run into the billions over the past 10 years, with SMEs being crippled as a result.
Following the FCA’s review, the UK’s major banks have been required to set up redress schemes to allow the SMEs to claim the compensation that they’re entitled to. Now, multi-million pound compensation pots have been set aside to deal with the increasing number of claims.
Nigel Beckwith, Head of Company & Corporate at Gosschalks, comments: “In the last two months, we’ve seen the banks awarding an increasing number of pay-outs to businesses – and these are not small amounts either.
“We’ve already had offers totalling more than £2m for five businesses from the banks as part of the redress scheme.”
But the redress scheme itself has faced widespread criticism among customers and solicitors for giving too much power to the banks, as Will Buckenham, litigation solicitor at Gosschalks, explains: “The banks are running these redress schemes how they want to, and they’re making it complicated for businesses that are owed money to make a successful claim.
“Our job is to ensure businesses are in the best possible position when it comes to speaking to the banks.”
As part of the redress scheme, banks invite their customers to take part in ‘fact finding interviews’. Meeting with the banks without seeking legal advice first can be a potentially costly mistake for customers, as Nigel Beckwith explains: “Although the banks insist that the ‘fact finding’ meeting is an attempt to share information on an even-handed basis, the reality is often very different.
“At these meetings, the bank’s representatives emphasise the fact that they have not looked at the specifics of the customer’s case, which effectively means there can be no information sharing on the bank’s part – just a one way flow of information from the customers with which the bank can potentially use to rally its defences at a later date.
“It’s essential that before any such meeting, the customer is fully rehearsed for the types of questions that will be thrown at them.
“What’s important is to understand the customer’s state of mind at the date they entered into the SWAP and that picture should not be coloured by what the customer now knows the SWAP actually does. Customers can easily shoot themselves in the foot by professing to understand what the SWAP does now with the benefit of hindsight.”
In the last five months, the average cost to the banks to pay out SWAPs compensation has tripled. The FCA’s latest data shows that 1,040 mis-selling victims have recovered £158.6m in compensation, with an average pay-out being £152,500. This is compared to an average settlement of £50,000 only five months ago.
Gosschalks has helped countless East Yorkshire businesses recover compensation since the SWAPs scandal. Last month alone we helped three clients win £850,000, just under £750,000 and over £250,000 respectively. We’ve also successfully claimed on behalf of clients who previously had claims rejected by the bank before approaching us.
Have you been mis-sold SWAPs?
We’ll protect your best interests and help you get the compensation you deserve. And your claim will be funded on a no win, no fee basis with all the legal costs being paid by the bank if your claim is successful.Return to the updates archive »