Seneca lines up 40 mis-selling claims

CORPORATE finance adviser Seneca is advising 40 small North West businesses that claim they were mis-sold complicated financial products.

The Haydock-based firm set up a new division – Seneca Banking Consultants – in September to help businesses seek compensation.

The cases involve loans worth £50m and it is also advising on two “very substantial” claims for larger loans which required hedging arrangements on just under £500m of debt facilities.

In the summer the Financial Services Authority (FSA) said there had been “serious failings” in the way complex hedging products had been marketed to thousands of small and medium-sized companies.

Eleven high street banks, including Barclays, Lloyds Banking Group, HSBC, the Royal Bank of Scotland, the Co-Operative Bank, Santander UK, and the Yorkshire and Clydesdale banks have agreed to compensate firms which were the victims of  mis-selling. Several other smaller lenders have joined the FSA compensation scheme, but there is concern that the process is taking too long.

Daniel Fallows, a director at North West-based Seneca Banking Consultants, said: “Action needs to be taken as an absolute priority. Hundreds of firms in the region have been sold products by banks they thought they could trust which in fact have damaged their business. The owners have been left straddled with ruinously high interest rates for loans and a great deal of personal anxiety and stress.”  

He added: “The products were often presented to them as a simple insurance against rising interest rates, when in fact these hedging products are highly complex financial derivatives. Many victims were not made aware of the nature of what the bank had involved them in – or the very significant costs attached to exiting the product. In some cases, this has caused businesses to fail.”

The FSA estimates that over 40,000 small and medium businesses may have been mis-sold interest protection products, which involve mechanisms known as swaps, collars or caps.

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