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Can I Claim?

Mis-sold Interest Rate Swaps and other Hedge claims present complex challenges. Recent case studies have revealed that key elements of claims could be overlooked if a specialist is not consulted.

How do I know if I have an Interest Rate Hedging Product?

Acting alone:

Interest Rate Hedging Products are extremely complex and are defined under the Markets in Financial Instruments Directive (MiFID) and the Committee of European Securities Regulators as complex by their very nature due to the risks involved with these market products. They are difficult to understand and key elements may be missed if a specialist is not consulted.

Seneca Banking Consultants:

We will be able to analyse your loan agreements and contracts from the Bank to determine whether or not you have entered any Interest Rate Hedging Products. Interest Rate Swaps and other Interest Rate Hedging Products are independent from your underlying loan facilities and each Bank produces different documents and confirmations for these products. Some products are even embedded within the loan and appear hidden. As experienced experts in these claims, we have reviewed countless documents and are trained in spotting these products.

How do I know if I’ve been mis-sold my Interest Rate Hedging Products?

Acting alone:

If you feel that the Bank did not fully explain to you that you were being sold an Interest Rate Hedging Product or what the product was, you may have been mis-sold that Interest Rate Hedging Product. However, the grounds for mis-selling are complex and are determined by the degree to which the Bank adhered to its regulatory obligations.

Seneca Banking Consultants:

We understand the regulatory framework governing the banking sector and are skilled in spotting cases of mis-selling. We are able to build your claim around whether or not the Bank has upheld its regulatory and statutory duty to sell you an Interest Rate Hedging Product in a fair manner or whether it should have been sold to you at all.

Do I have an Interest Rate Hedging Product if I have a Tailored Business Loan?

Acting alone:

Tailored Business Loans can have embedded Interest Rate Hedging Products. You may not be able to determine whether or not your loan is either a Tailored Business Loan or if it has an Interest Rate Hedging Product.

Seneca Banking Consultants:

We have a number of clients with Tailored Business Loans and have looked at countless loan agreements with and without embedded Interest Rate Hedging Products. We are experienced in being able to determine whether or not your loan has an embedded Swap or other Interest Rate Hedging Product. These loans are problematic because the Banks have not made it clear to customers that they are buying a separate product from the underlying loan agreement. The risks and break costs associated with embedded Interest Rate Hedging Products are not properly disclosed to customers and are not easy to determine from any of the documentation provided by the Banks. Unlike a normal fixed rate loan where your exit fees/break costs are usually pre-determined, a Tailored Business Loan with an embedded Interest Rate Hedging Product will have exit fees/break costs that are determined by the derivatives market, which is volatile and can result in fees that are disproportionately large compared to the amount borrowed. We will be able to review your documentation and inform you of whether or not your Tailored Business Loan has an Interest Rate Hedging Product that has been mis-sold.

How do I know if I am ‘sophisticated’ under the FCA review criteria?

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The FCA’s sophistication test is not clear and can be misleading. There are a number of caveats and exceptions which can exclude a customer that would normally appear to be non-sophisticated. The complexity of the test may deter you from submitting your claim if you are not experienced in dealing with the Banks for these types of claims.

Seneca Banking Consultants:

We have found that Banks do not apply the test uniformly. The FCA’s initial description of the test differs from a subsequent version produced to assist Banks in their application of the test. Our experience has enabled us to assess how the Banks should apply the test versus how we have seen them apply it in practice. We are able to advocate for our clients and ensure that they are classed appropriately and that the test is used fairly. Even if the Bank decides that you are ‘sophisticated’ we will present to the Bank the qualitative and quantitative reasons why we believe you are non-sophisticated if in our opinion you have been wrongly classified. We have also found that some Banks have not applied the test uniformly. We will be able to progress your claim as a result of the experience and knowledge we have gained as leading experts in this area. The FCA’s sophistication test determines whether or not you will be included within the official Review, it does not eliminate your ability to have your products reviewed by the Bank through the complaints procedure, the Financial Ombudsman Service or your ability to litigate. Being sophisticated under the test also does not guarantee that your product will not be accepted into the FCA review and we will be able to make those key judgment calls for you.

How much can I claim?

Acting alone:

It is difficult to determine how much you should claim for and whether or not an offer of redress is fair. You may be willing and encouraged by your Bank to settle for just a replacement Interest Rate Hedging Product, an alternative Interest Rate Hedging Product or less, when in fact you are entitled to a lot more. You may not feel able to negotiate your offer with the Bank and may not know you can claim for consequential losses or what those losses could be.

Seneca Banking Consultants

We can calculate exactly how much you can claim. We have advanced software that can recreate the trade of your Interest Rate Hedging Product on the day you purchased it, to the extent of being able to calculate the cost difference between your Interest Rate Hedging Product and the cost of an alternative product that may have been more suitable. We are also able to calculate the profit the Bank made at the time of the trade and what your ‘mark-to-market’ break costs would be. We are able to advise on all consequential losses flowing directly from the sale of the Interest Rate Hedging Product where reasonably foreseeable and have partner forensic accountants that can quantify more complex losses such as loss of trading profits.

What does it mean if my claim is time barred or outside of limitation?

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If you are unsure about the statutory limitation for your claim, you may miss a crucial opportunity to keep your options open to litigation as a route to redress. Additionally, if you are aware of your limitation deadline and how long you have left to bring a claim through the Courts, you may not be aware of the fact that you can ‘stop the clock’ on limitation giving you time to pursue your claim through alternative routes, therefore potentially saving yourself the additional cost of litigating.

Seneca Banking Consultants:

We will be able to assess your claim and indicate whether or not you have a claim for breach of contract or negligence. For breach of contract the limitation period is 6 years from the date you entered into the Interest Rate Hedging Product, this means that you have 6 years from the start of your Interest Rate Hedging Product to pursue a claim for breach of contract. However, it can be difficult to determine the start of your contract if for instance you have a product with a deferred start date. If you are already outside of your 6 year limitation period, we will be able to assess whether or not you have a claim for ‘latent damage’ in negligence, which could enable you to bring a claim through the Courts within 3 years of the date of knowledge of the negligent act. Additionally, if you would like to keep litigation open as an option we can draft and send a limitation standstill agreement to the Bank requesting they agree to ‘stop the clock’ on limitation while the product is being reviewed by the Bank. This prevents the Bank from relying on the defence of limitation.

Can I still claim if my Company has gone into Administration or is dissolved?

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Entering into administration or having a company dissolved with an outstanding claim for a mis-sold Interest Rate Hedging Product is not straightforward and can be very onerous. You may not know whether or not you should or can pursue a claim.

Seneca Banking Consultants:

We have clients who are in administration and we have experience working with administrators. We will advocate for your claim to be pursued under the Review and for the FCA to take a more pro-active role in ensuring that claims from companies in administration are heard. If your company has been dissolved you still can make a claim. We will advise you on the steps you need to take to reinstate your company so that you may receive any redress offered.

What if I receive a redress offer that I do not think is fair and reasonable?

Acting alone:

You may not feel confident negotiating with the Bank or depending on your relationship with your Bank, you may not feel like you are in a good bargaining position to negotiate appropriate redress. Also, if the Bank has a team of solicitors on their side, you may feel as though you do not have the same bargaining power as the Bank.

Seneca Banking Consultants:

We have experience negotiating claims with the Banks and have former Senior Bank Management and Solicitors on our team who will be able to judge whether or not your offer is fair and reasonable. We deal with the Banks every day and have the expertise to help you level the playing field.