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JMW Receive Many Interest Rate Swap Enquires
Fast growing Manchester based law firm JMW Solicitors LLP has reported that more than 25 businesses have contacted them in the last 2 weeks having been adversely affected by interest rate swap agreements (“IRSA’s).
The enquiries have come from JMW’s existing client base, professional contacts and via the firm’s website. JMW has quickly gained the top listing on Google listings for IRSA claims which has already produced 25% of the cases.
The banks have employed aggressive tactics that have resulted in customers effectively having no choice about whether to agree to an IRSA when borrowing from banks. It was frequently a non-negotiable condition of lending, stipulated by the bank. There are also a number of examples of the banks introducing the IRSA at the very last minute before completing the loan facility, as a “protective measure” to guard against potential rises in interest rates – a pressurised sale.
All of the businesses that JMW have been in contact with have complained that the downsides to the IRSA (i.e. charges when interest rates fell and very high exit costs) were never explained to them.
This week, the FSA set out its proposals for the role of the “Independent Reviewer” who is to be appointed to oversee the redress process within each bank. JMW have serious concerns that far too much power still rests with the banks when dealing with customers’ claims.
Andrew Farrell, Partner and Head of Litigation at JMW, who is pursuing the cases with Partner Marc Yaffe said,
“The FSA has allowed the banks to appoint their own independent reviewer and from the information we have seen to date, there appears to be very little scope for ensuring that the bank’s nomination is entirely impartial.
“To put the FSA scheme into context, the bank will decide whether the customer is to be treated as an “unsophisticated customer”, the bank will then decide whether to review the IRSA, the bank will decide whether to offer any form of redress and the bank will decide the amount and form of any such redress, with such redress to be overseen by a bank appointed “independent” reviewer. The FSA has clearly found there to have been mis-selling on a large scale by the banks but we cannot see how this is a sufficiently robust response to ensure matters are put right”
“The wider issue is that low interest rates have been set by the Bank of England in part to provide a low cost of borrowing for businesses and to encourage investment and growth. IRSAs, for those businesses who have them, have entirely negated any benefit that may have been gained from low interest rates.”
“The clearest example of this we have seen so far at JMW has been a small property developer/landlord business that took out a £500,000 loan in late 2009 on a variable rate of 1.5% above base rate (i.e.2%) and was required by the bank to also take out an IRSA which resulted in charges if the variable rate was below 4.8%. From day one, the customer was incurring an additional cost payable to the bank of £1,200 per month with an unaffordable exit cost of £70,000 to end the IRSA. This example is also the lowest value claim we have seen so far, with claims in the hundreds of thousands of pounds being the norm.”
“We urge any business customers who have concerns to contact us, free of charge, and without obligation. We are able to help businesses obtain compensation and the more information we can gather from individual cases, the more we can assist the collective group with the process of addressing the clear imbalance that presently exists.”
For more information:
0161 828 1981
07595 277 842
Note to Editors
JMW Solicitors LLP is one of the leading Manchester law firms and offers a broad range of legal services to both commercial and private clients. We are committed to providing legal services in a cost effective and timely manner.
Partner and Head of Department
Commercial Litigation/Corporate Recovery and Insolvency