Lawyers warn swap mis-selling victims

As the legal industry assesses the implications of the recent FSA report on interest rate swaps mis-selling, a worrying picture is starting to emerge.

Whilst the report concluded that in 90% of the review sample of 173 cases banks had failed in their regulatory obligations and the banks are now carrying out their own reviews, there are other signs that point to victims still being best advised to seek legal representation and not rely on the banks.

Interest rate swaps were sold on the basis of a rising market and these hedging products were designed to protect SMEs from increasing interest rates.

However, lenders failed to provide a full explanation of the associated risks and therefore could be deemed culpable of mis-selling many of these products.

"Whilst the headline findings of the FSA review appear to be positive" said Simon Cottrell, Senior Partner at Goldsmith Williams.

"The detail underneath this is by no means as favourable."

"So far the banks appear to be hard balling customers and the result is that these reviews could prove to be a little like putting the wolves in charge of the sheep."

"The public need to have confidence that this review process is robust and not just paying lip service."

"Our experience so far is that there is a danger that this is going to turn out to be a tick box exercise."

"This feeling is heightened when you consider the published figures for bank provisions for interest rate swap mis-selling cases which do not seem anywhere near substantial enough."