By Claire West
The delay in the FCA’s review of the interest rate swap mis-selling scandal is having a severe impact on small businesses, experts have warned.
Whilst banks have started to pay out to some clients, a senior solicitor at Berg believes that some business owners might be misled into thinking their compensation will be agreed soon.
Berg, a Manchester-based firm with more than 30 years’ experience in complex commercial disputes, is representing well over 100 companies and businesses throughout the UK which have been affected by mis-selling.
“What’s worrying is that the FCA pilot was scheduled to finish in September 2012, but a year on, it is still in progress,” commented Alison Loveday, managing partner at Berg.
“Our concern is that many clients might be disappointed by the outcome of their reviews. The six year limitation rule is still in place for many of these swap agreements and the deadline is getting scarily close for a large proportion of them.
“If the deadline passes while the review is underway, they will be too late to receive any kind of compensation if their claim under the review is not successful.
“Businesses are under increasing pressure to stay afloat, and this delay in redress is holding back growth, some have had to close their doors altogether as a result.
“Banks have asked their clients to wait until the review process is over before making a claim, but people don’t appreciate that this could easily push them past the limitation deadline. This process totally ignores the problem, and could well result in many businesses being unable to pursue a genuine claim.
“Given the delay, one way to improve the situation is for banks to agree to wave the technical points in relation to limitations or at the very least replace them with reasonable standstill agreements. If this can be done for some clients, it can be done for all, allowing a more constructive environment, for more businesses to receive the compensation they rightly deserve either through the FCA review or the Courts.
“We’d urge any business that has been affected by swaps to take action and seek advice today. Whilst the review process appears to be straightforward, it deals with detailed and complex products and terms. With no right to appeal after the review, it is important that they give themselves the best opportunity to secure compensation for the loss and damages caused to their business. The banks employ solicitors and accountants to represent them in the review process and, without proper advice, clients will be ‘on the back foot’.”