Businesses of all size are suffering as a result of swap and hedging deals.
If your business is suffering, what can you do?
Many clients were previously reluctant to complain or raise any issues with their bank in circumstances where they recognised they would be reliant upon their bank for on-going funding. Other customers were concerned that the banks would carry out threats
to invoke a breach of covenant, call in personal guarantees or push the business into corporate recovery or insolvency.
Following the FSA Statement at the end of June 2012, the banks have tended to take a "softer" approach. Whereas some customers were being threatened with the appointment of LPA Receivers, the banks have now "backed off" – albeit probably temporarily. This
is consistent with the FSA deal, which deal includes the banks agreeing not to take enforcement action against customers, save in exceptional circumstances.
In the light of this commitment, more and more clients are now prepared to raise their concerns.
It is important, however, that when they do so, they do so from a position of strength and with full knowledge.We can help ensure that you are fully aware of your position and what potential claims you might have against the
For many clients they do not want to litigate or commence court proceedings but do want to take advantage of the lower interest rates that are now available. They want to do so without having to pay the significant exit fees that would otherwise be payable
under their swap/hedge agreement.
Again we can help. Not only can we assist with the negotiations with your current bank, we also have excellent relationships with other banks and can facilitate refinancing and/or a move to a new bank.
Please contact us if you would like to discuss this further.
It is important in our experience that customers take the initiative and do not simply sit back to wait to be contacted by the bank or its independent assessors. What the bank or its successors may consider to be "appropriate redress" may be entirely different
from the view taken by customer or the courts. The time to find out what compensation you might be entitled to is now, so that you can maximise your position in any negotiations.
UPDATE – 20/09/2012 –
On 20th September 2012 The Telegraph published an article stating that the first 50 interest rate swap cases would be reviewed by the independent bodies and the FSA. It stated that compensation would be offered "within weeks."
Whilst Berg is unable at this stage to anticipate the outcome of the review or what may be deemed by the FSA to be "appropriate redress" Berg believes that it will still be important for companies and individuals to have a professional
review carried out by a totally independent advisor to ensure that they recover the full extent of their losses.
Presently we think that the majority of interest rate swap claims are more likely to be settled through mediation, with only a relatively small number requiring their cases to be taken to the High Court.
To discuss how we can provide further advice in connection with these issues, please contact Alison Loveday, Managing Partener and Head of Employment Team, by email to
firstname.lastname@example.org or alternatively you can call Alison on 0161 833 9211.
The information and opinions contained in this article are not intended to be comprehensive or to provide legal advice. No responsibility for this article’s 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 the contents of this article.