Berg vows to fight on over interest rate swaps
THE senior partner of a law firm which represents small businesses making claims for mis-sold interest rate hedging products (IRHPs) has vowed to continue the “fearless pursuit” of justice for his clients.
Reuben Berg, of Manchester-based Berg, was speaking following the publication of the company’s 2015 Banking Report which is highly critical of processes which have followed the emergence of the so-called interest rate swapping scandal.
The scandal refers to IRHPs offered to many small and medium sized enterprises between 2002 and 2010 which encouraged firms to swap their interest rates for fixed rate alternatives.
When the base interest rate fell following the banking crisis late in 2007, businesses who had swapped continued to over pay interest.
The Berg report refers to the pending outcome of a Financial Conduct Authority (FCA) review and cites a conflict of interest between big banks, big accountancy firms and the Treasury, which is preventing the resolution of claims.
Managing partner at Berg, Alison Loveday, reports that thousands of businesses have been left with no resolution by the FCA-led review and the huge costs associated with legal proceedings mean litigation is not an option for many companies.
“We need to consider how long this vicious cycle of defence and counter aergument and go on for,” she writes.
“For, if it continues as it is, the toxic aftermath could cripple business banking for generations to come.”
And Mr Berg told TheBusinessDesk that “there are large challenges for independent businesses being fairly compensated for being mis-sold IRHPs, despite the words coming out of the regulator and the banks”.
“The banks are putting up every possible obstacle to paying out to SMEs, despite their public relations,” he said. “They are being as difficult as they can be.”
The report is scathing about RBS’s use of the Global Restructuring Group (GRG) and highlights the demise – underlined in the recent Tomlinson Report – concerning the treatment of customers in distress.
Mr Berg said: “The situation is particularly grotesque, given that RBS are using taxpayers’ money to defend the indefensible.
“In the fullness of time what’s going to come out about GRG is that there are many vested interests and conflicts of interest between the treasury, regulators and banks.
“They are not fundamentally addressing the issues or dealing with wrong doing.
“We’ve always espoused the cause of independent businesses and have always been fearless about it. Independent businesses should have the same access to quality advice as the banks and the regulators who can get the biggest law firms to represent them with no regard to the cost involved.
“There is tide swell of opinion in our favour. When we first identified the situation one of the banks and a lot of people said we would get nowhere. But it may take time but we are now in a situation where banks are starting to own up and show some integrity.”
A spokesperson for RBS said: “Following the reckless lending leading up to the financial crisis, severe economic circumstances and dramatic falls in property prices meant that the Bank’s shareholders and customers lost billions of pounds. Tens of thousands of our customers saw the value of their assets plummet and their businesses struggle. Many ended up in serious financial difficulty.
“GRG helped minimise losses where it could, and successfully turned round many businesses it worked with, advancing more than £100m of new lending and safeguarding hundreds of thousands of jobs.
“As a result, on average fewer than 10% of GRG’s SME customers in Great Britain end up in insolvency each year.”
“The FCA is now conducting its own review concerning how the Bank works with financially distressed customers. We are cooperating fully with this review.
“On interest rate swaps, we have worked in line with the FCA agreed process to ensure that all customers mis-sold these products get fair and reasonable redress.”
