Interest Rate Swaps Mis-selling: What should I do if my bank’s solicitors contact me for a meeting?

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Posted in:Banking and Finance|March 21, 2013 | Join the mailing list

What should I do if my bank or its solicitors contact me and want a meeting?

Important – Please Read

The FSA issued a press release on 29 June 2012 confirming it has found systematic mis-selling of interest rate protection or swaps (”IRS”), with their bank.  When the follow up report came out on 31
January 2013 announcing the result of the FSA pilot study, it confirmed that there had been one or more regulatory breaches in over 90% of cases.  As a result, clients are entitled to be compensated.  It remains unclear, however, how this compensation will
be calculated.

Each Bank has agreed a process with the FSA for dealing with potential claims.  Many banks are writing to their customers direct, to confirm that they are investigating all claims and will be in contact
again.  This in itself raises questions in relation to limitation (see our article here which identifies why this is problematic).

Some banks, including Barclays, have appointed solicitors to assist them in the process.  We are aware, for example, that Eversheds and TLT are acting on behalf of Barclays.

Although this meeting is described as a "fact find", it has been confirmed that the meeting will be "on the record".  It is likely that the Bank’s solicitors will have all documents and information available
to them, unlike many clients who may find that they have relatively few documents in their possession.  They may therefore struggle to "piece together" the history, and to answer the questions put to them.

As the meeting is, however, on the record, a client’s responses given at this meeting could subsequently be used to counter their claim for that there has been any mis-selling and/or in any subsequent
litigation. 

It is the advice of Berg and BullyBanks (the principle lobby group in this area), that all clients should have a solicitor present when this fact-find meeting takes place.  This should ensure that clients
do not feel intimidated or put under pressure during the course of the meeting, and that they can present their in the best terms possible.  This includes not only the facts surrounding how the IRS product was sold to them, but also the impact it has had on
them personally and their business.  This will be essential if true compensation is to be awarded under the FSA redress scheme.  Furthermore, if it later transpires that the compensation offered is not adequate under the FSA scheme, then if litigation is still
an option. The case will not have been irretrievably damaged by comments that they may have innocently made during the course a fact-find meeting.

It is noteworthy that where a client has already engaged a solicitor, then any contact from the Bank’s solicitors should be via that firm, rather than the client.  To do otherwise, could be a breach of
the Solicitors Regulation Authority code of conduct.

If therefore you are contacted by the Bank or its solicitors, your best course of action is to give them the contact details of your legal representative, and to refer the bank or its solicitor to them. 
If you do not have legal representation and wish to seek redress, we highly recommend that you do not attempt this without legal representation.  You should not divulge information over the telephone, and should approach all discussions whether over the telephone
or at a meeting with extreme caution.

Please a link below to our article which highlights the danger of ”going it alone”.

If you have any queries regarding any aspect of the above article or Interest Rate Hedging Products in general please contact a member of our Interest Rate Swaps team.

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