Swap victims still ‘poorly treated’ by banks, says Seneca

SENECA Banking Consultants, which is acting for around 400 companies that say they were mis-sold interest rate swap products, is complaining to the Financial Conduct Authority (FCA) about the way its clients are being treated by banks.

It says banks are giving little explanation when they reject a claim and are offering an incentive for claimants to waive their right to all losses associated with a miss-sold swap.

The products were meant to insure against the risk of higher interest rates, but when rates fell, businesses were left with bills typically running into tens of thousands of pounds, or facing huge penalties to get out of the deals.

Seneca director Dan Fallows said: “Any compensation should put a business back in the position it would have been in had it never been mis-sold one of these products. What we see instead is banks offering settlements for direct losses – paying back the excessive interest that was charged under the swap.

“Many businesses do not appreciate that this is only half the battle. They may be entitled to a pay out for ‘consequential losses’ – the losses which may have ensued as a result of the costs of the swap, and which can include professional fees, loss of opportunity, damaged supplier relationships, the business ending up in an insolvency process and so on.”

He added: “The regulator is aware of the problem but we are still seeing banks offering to pay an extra 8% if customers forfeit the right to make a claim for consequential loss. So if a business was due to receive £100,000 compensation to cover its direct losses they will be offered £8,000 to write-off the rest of their claim. At best, the banks are adopting a one-size fits all approach. At worst,  banks are once again gambling that businesses either don’t understand the reality of what’s being presented to them or are hoping firms can’t be bothered to pursue the redress they are due.”

The banks involved in the interest rate swap review include: Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland, Santander, Clydesdale and Yorkshire Banks, Co-op Bank, Allied Irish Bank and Bank of Ireland.