Posted by Chris.Goodfellow in Regulation on Tue, 24/02/2015 – 13:09
RBS faces legal action from a number of entrepreneurs who claim its interest rate swap products forced them into insolvency.
The financial products have been part of a Financial Conduct Authority’s (FCA) review scheme, which has forced a number of banks to pay out £1.8bn to 11,000 customers, after it was found 90% of these products could have been mis-sold to up to 30,000 small businesses.
Patrick Selley, consultant solicitor at Keystone Law, who’s acting on behalf of several of the individuals told BusinessZone the cases amounted to “systemic fraud” and damages could be as high as £100m.
“We don’t think interest rate hedging products could have been suitable for any retail customers,” said Selley, who added: “They targeted customers with substantial properties, and in my opinion [that] was deliberate.”
Selley said contracts had large break fees and in some cases three-year loans tied customers into ten-year terms.
The case is expected to start in the next few months.
RBS declined to comment on the legal action.