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Thousands of small businesses battling the banks over a mis-selling scandal have suffered a major setback in their quest for compensation. A Court of Session judge has dismissed a claim against Royal Bank of Scotland for the sale of a complex financial product to a small business. The landmark test case judgment involving interest rate swap agreements (IRSAs) could now help banks head off a flood of legal claims. The Herald revealed in June how IRSAs have cost UK businesses billions of pounds in additional costs and potentially threaten thousands of jobs, and last month the Financial Services Authority (FSA) announced a "review and redress" process for all IRSA sales. In the first case of its kind to go to judgment in the UK, Lord Hodge yesterday ruled against property company Grant Estates in its claim against RBS for mis-selling a hedging device that fixed the interest rate on the company's £777,000 borrowings in 2007 just as rates were about to plunge.
Property developers Ruari and Jamie Stephen had claimed the bank advised them to take out the IRSA as a protection against rising rates, when the bank knew they were likely to fall, and its extra cost burden had ended up pushing the business into administration. The judgment has been eagerly awaited by the Bully Banks campaign, which has complained that the FSA review will be controlled by the banks and will force businesses to take legal action. The law firms involved in the campaign have revealed they have a raft of clients with substantial claims, many of which have been settled out of court. However, Cat McLean, partner at MBM Commercial in Edinburgh, admitted yesterday that the judgment was "disappointing", adding: "It will be that much more difficult now to pursue a swap mis-selling case through the courts, as Lord Hodge's decision will have persuasive authority and is obviously very thoughtfully and carefully constructed."..........Read more here: Court blow for thousands in banking rip-off battle
AAD Blog pages of Libor - Rate Rigging:
Barclays in new FSA investigation - allaboutFORUMS
Bankers found to have rigged Libor rate could face jail - allaboutFORUMS
RBS has sacked four traders over the Libor-fixing scandal - allaboutFORUMS
Sacked RBS trader accused bank chiefs of colluding with staff to rig interest rates - allaboutFORUMS
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Barclays will on Monday face what is being billed as a 'test case' over claims it sold interest rate swaps to a customer while at the same time knowingly attempting to manipulate borrowing rates.
Guardian Care Homes is claiming about £38m from Barclays as part of a lawsuit against the bank over what the company alleges were millions of pounds of interest rate swaps wrongly sold to it by the lender's investment banking arm. Barclays is vigorously contesting the lawsuit and is expected to ask the court to throw out the Libor-rigging claims, which it is set to argue are not relevant to the mis-selling case. The claims will be heard in the London High Court before Lord Justice Julian Flaux and is viewed in the legal industry as a likely test case for how the English courts will decide on swap mis-selling and Libor-rigging cases. In June, Barclays admitted attempting to manipulate Libor, paying £290m in fines to the British and US authorities to settle their investigations. Lawyers for Guardian Care Homes will argue that Barclays' admission of Libor-rigging means that any interest rate derivatives sold by the bank should be voided, a precedent which agreed could open the lender and other banks found to be involved in manipulating borrowing rates to billions of pounds in legal claims from customers.....Read more here: