Legal News | Banks Asking Mis-sold Firms To Delay Legal Action

It is understood from a report in the Telegraph that Barclays plc and Lloyds Banking Group are writing to businesses engaged in litigation with them over the interest swap mis-selling scandal asking them to suspend their claims until they find out whether they are eligible for the FSA deal, which would provide “redress” to such firms.

However, the FSA scheme would potentially limit compensation to “non-sophisticated” customers, so it is likely that many firms will reject the request and press ahead with litigation.

One such firm is the Guardian Care Homes Group, which has made a £36m claim against Barclays over the mis-selling of two interest rate hedging agreements, an interest rate swap and an interest rate collar agreement.

The case could open the way to claims for sums far exceeding direct losses incurred through Libor manipulation, which were admitted in a £290m settlement with regulators last month.

Gary Hartland, the group’s chief executive, said: “We’re not going to choose the FSA scheme, which has no parameters and questionable credibility, over a court ruling. (Barclays’} approach is frustrating, but unsurprising given their past treatment of smaller businesses.”

In 2007 Mr Hartland took out a £70m pound loan with Barclays and was forced to take out an interest rate swap as a condition of the loan but assured that it would save the group money. Ultimately, however, it cost his business an extra £12.5m in interest, hence the court case.

And campaign group Bully Banks is warning of further litigation, with a spokesman saying: “…it seems banks aren’t offering anything meaningful to persuade companies to deviate from the legal route.”

As Gary Hartland said: “If we could prove Libor had been fixed the game was over. They (Barclays) were loading the dice. They were offering you a bet and at the same time fixing the bet.”

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Mackrell Turner Garrett Solicitors in London

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