Banks – You have to love them – or do you?

Banks – You have to love them – or do you?


Is there a month that goes by when banks do not suffer from some form of adverse publicity?

  • Claims by disgruntled employee bankers;
  • Litigation against directors of loss-making banks;
  • The LIBOR-fixing scandal;
  • And as we have reported previously, interest rate swap (IRS) claims.

These are just a few of the financial services disputes that appear to be on the increase.

In previous blogs we referred to the IRS case of Green-v-The Royal Bank of Scotland Plc.

Just to recap, Mr Rowley was an hotelier and Mr Green was a real estate and residential lettings agent.

Accordingly neither one of them was a financial services expert and their bank, The Royal Bank of Scotland was aware of the latter.

Mr Rowley and Mr Green entered into an IRS agreement, which specified that a payment would be required if it was terminated early. The business partners wanted to alter their arrangement with the bank thereby terminating the IRS.

RBS than imposed a termination charge of £138,650.

As one can imagine this was a huge sum for any business to find, let alone a small partnership.

In 2011 the claimants brought an action for negligent mis-selling and breach of duty to give suitable advice, in relation to the sale of the IRS agreement which failed.

The claimants then appealed and in October 2013, the Court of Appeal published its judgement [2012] EWHC 3661 QB. The claimants appeal was unsuccessful.

The claimants alleged that compliance with the relevant COBE Rules gave rise to a common law duty on the bank’s behalf to explain clearly the potential quantum of any termination costs, in a way that Mr Rowley and Mr Green could understand them.

The Court of Appeal dismissed the claimant’s appeal on the basis that there was a difference between “providing information” and “providing advice”.

Interestingly however, the court emphasised that the case was highly fact-sensitive.

The other point to consider is that until Green-V-RBS there were no reported decisions of the English courts on the issue, presumably because cases will have been settled before reaching trial.

Indeed it would not be uncommon for parties to agree to a confidentiality agreement.

As reported above, the Green decision was highly fact-sensitive and there is likely to be further litigation of IRS products, particularly as the FSA (formerly the FCA), has ordered several banks to carry out an analysis of their own selling of such products.

The Financial Ombudsman Service has also revealed in one of their reviews, that they received 258 complaints from businesses about interest rate hedging products sold by banks.

The FOS however could not deal with most of the latter complaints, because they came from non-eligible businesses.

If you believe you have an interest rate swap claim, we strongly recommend that you contact us today; as your claim may be statute barred under the Limitation Act 1980.

Please complete our enquiry form and one of our qualified solicitors will contact you.


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No responsibility for its accuracy and correctness, or for any consequences of relying on it, is assumed by any member or employee of Summit Law LLP. The information and commentary does not and is not intended to amount to legal advice and is not intended to be relied upon.

You are strongly advised to obtain advice from a Solicitor about your specific case or matter and not to rely on the information or comments in this article.