Time is running out for bringing a court claim against banks for the mis-selling of interest rate swaps according to Lucy Baker, commercial litigation solicitor at Brabners Chaffe Street in Manchester.
On 31 January 2013 and 14 February 2013 the Financial Services Authority published updates regarding the mis-sold interest rate swaps by banks including Barclays, RBS and Lloyds Banking Group.
The report revealed the FSA's findings from the pilot reviews completed with Barclays, Lloyds Banking Group, RBS, Natwest, Allied Irish Bank, Bank of Ireland, Co-operative Bank, Clydesdale and Yorkshire Banks.
The FSA reviewed the sale of around 40,000 interest rate hedging products and found that over 90% failed to comply with one or more of the FSA's regulatory requirements. It has also added new criteria to the test of whether a customer is "sophisticated" or not.
In order to help small and medium sized businesses assess whether they fall within the review the FSA has produced a flowchart and guidelines to enable consistency from the banks with regards to redress, by attempting to put the customers back in the position they would have been in had the breach of regulatory requirements not occurred.
The FSA is set to announce its findings from the pilots of other banks who agreed to the review within the next few months.
The banks are aiming to complete the review within six months, however no guarantees have been given.
Small and medium sized businesses that bought interest rate hedging products commencing in 2007 will be approaching its six-year anniversary. In legal terms this means it will be approaching the limitation period under the Limitation Act 1980; any claim which is not brought within six years of the date of the hedging product commencing will be statute barred from pursuing court action.
Even if a company falls within the FSA scheme, it may wish to preserve its right to bring proceedings in the event that the proposals for redress that it recovers from its bank are unsatisfactory.
Barker suggests that any business which entered into an interest rate hedging product should take immediate legal advice, as there are protective writs and standstill agreements with the banks that can be entered into to stop time running out.