Following the settlement of Hockin v RBS, a 4-part video series describes the case from start to finish. In the 1st installment, the background to the claim is explained by berg Chief Executive Alison Loveday – View the Video here.
Find out what is covered in the video below.
What is an interest rate swap?
It should be a proper document and agreement that will protect a business, but in reality the way these products were sold were that they offered no protection at all but what they did generate money for the bank
What was the claimant’s business?
The Hockin family grew a very successful property business down near Plymouth and that area of the country. They started taking large industrial units and splitting them in to small and manageable units for startup businesses, and they were able to move them to larger units as their business grew. The business had been running about 30 years when it got in to difficulties with RBS.
How did the swap begin to affect the business?
Within quite a short time, literally months after the swap had been sold to the Hockin family, it started to have a detrimental impact on the business…Actual interest rates in the economy were falling, but this meant the amount they had to find each month because of the swap product, they actually had to find more money each month, so it did start to cause a strain on cash flow.
What was the claimant’s experience with RBS’ Global Restructuring Group (GRG) ?
They had to have an independent business review and then very quickly found themselves in RBS’ Global Restructuring Group. Although that division of the bank was said to be a part of the bank that had greater flexibility and would support a business and try and return it to mainstream banking, like many other businesses this was far from the experience the Hockin family had. In fact the pressure ramped up even more, the amount of interest they had to find every month and the charges imposed by the bank increased significantly so rather than being under less pressure they were under more pressure
With the business sold off and put in to administration, what did the claimants do next?
After the business had been sold off to a separate fund, Isobel, the business was put in to administration. At that point again they questioned what would happen if the loan was sold, what was happening to the hedging product, but they couldn’t get any satisfactory answers.
Once the business was in administration then really they lost control over their ability to fight or challenge the swap, and ultimately when I met them in December 2012, they were really at their wits end. They didn’t know who to turn to, they found any attempt they made to engage directly with the bank either through themselves, maybe through their accountancy contacts or through their MP, were not really being taken seriously.
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The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by berg or any of its partners or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.