Inquesta seeing surge in swaps cases

A NORTH West forensic accountancy firm is seeing a boom in the number of cases it is handling for firms mis-sold interest rate swap products.

Inquesta, based in East Manchester, is advising clients nationwide on consequential loss claims totalling more than £12m after a surge of cases in the past month.

The claims are for losses that small businesses believe they suffered as a direct result of having to make payments on mis-sold interest rate swaps or to fund hefty penalties to end them.

One case being pursued is for a property company which took out swaps with annual payments of £750,000 and a penalty of £1.6m to break them.

The business forecasted an annual cash deficit of £250,000 and, as a result, was subsequently liquidated and the shareholder made bankrupt.

Consequential loss claims represent the next phase of the mis-selling scandal, as they can only be submitted once victims have received offers of basic redress from their banks in relation to the interest paid on the swaps.

Inquesta is assessing consequential loss claims relating to 50 mis-sold swap deals taken out by clients ranging from care homes and property firms to hotels, GP surgeries, roofing and courier businesses.

Its caseload involves claims ranging from £50,000 to £5m, and they currently total £12.3m.

Director Rob Miller said: “Due to the sheer amount of the additional interest paid on most swaps, we believe it likely that most, if not all, victims will have suffered some sort of consequential loss.

“Our aim is to put the claimant back in the position they would have been in but for entering into the mis-sold swap.”

Interest rate swap products were sold on the basis that they would act as a safeguard to protect smaller businesses against rising interest rates.
However, when rates were slashed in 2008 and 2009, many firms were left with huge bills and penalties to get out of often complex and sophisticated deals, which many said they had not been informed about.

The Financial Conduct Authority said yesterday Britain’s largest banks – Lloyds Banking Group, Royal Bank of Scotland, Barclays and HSBC – had paid out £482m to the end of February out of £3.75bn set aside to compensate SMEs for mis-sold products.