Legal basis of IRHP Claims
The types of derivative products on which we have advised include:
- Interest rate swaps – including vanilla swaps, multi-callable swaps and LIBOR and base rate swaps
- Interest rate floors, caps and collars
Typical examples of matters giving rise to justified complaints include:
- mis-matches between the underlying value of the loan and the interest rate swap, with customers being sold swaps which far exceed the term of their underlying borrowing, or where the notional amount of the swap is far in excess of the actual borrowing (or in some cases both);
- substantial mis-matches between the length of the loan facility and the length of the swap product coupled with insistence by the bank that the customer enter into the interest rate hedge as a condition precedent of the lending facilities;
- customers being forced to continue with the interest rate hedges in order to maintain their current lending facility upon renewal;
- banks failing to explain to their customers the extent of the exit or breakage costs of the swaps and failing to ensure that the derivative products offered meet the needs of the customers;
- breaches by the banks of their duty of care to customers coupled with negligent (and sometimes even outright fraudulent) misrepresentations by the banks as to the nature or effect of the products sold; and
- failure by the banks to comply with their regulatory obligations under the FCA Conduct of Business Sourcebook (COBS).
Bank customers who consider they may have been mis-sold these financial products should seek appropriate advice without delay. Banks are likely to argue that mis-selling claims are time-barred 6 years after the date of the sale of the financial product which is the subject of the complaint. Therefore, customers with valid claims would be well advised to ensure they have commenced court proceedings in time, or have agreed a formal standstill with the bank. Additionally, the banks may conceivably try to argue in some circumstances that a right to cancel the swap agreement is affected if there is significant delay in notifying the bank of the claim for cancellation.