Interest Rate Swaps
“Lance Mason is specialised in seeking compensation for the victims of financial mis-selling. If you are suffering financially as a result of mis-sold interest rate swaps, contact our expert team for free advice.”
The intricacies associated with interest rate swaps can be quite confusing. They were often mis-sold to small and medium enterprises (SMEs) who did not fully understand the complexities behind the terms and conditions. Interest rate swaps were made to seem attractive and inviting but the terms were sometimes not fully explained.
The idea was that interest rate swap agreements would protect businesses from interest rate rises when they took out a loan. Under the terms of the agreement, the interest rates would fluctuate and remain fixed when appropriate, depending on the economic climate at the time. For the most part, this did not happen.
Another aspect of interest rate swap agreements that was often not made clear was that the terms of the loan and swaps were entirely separate agreements. Many companies found that even when their loans were paid off, they were still tied in to making payments for interest rate swaps. In some cases, cancellation fees were up to to 50% of the initial loan taken out.
The scandal itself has gained significant media attention over the last few years. The Financial Conduct Authority (FCA) asserts that interest rate swaps were mis-sold by much of the banking industry and that funds needed to be set aside in order to compensate the victims.
Many businesses suffered immensely as a result of this mis-selling. The pressure of repaying the loan combined with the excessive interest rate swaps fees was too much for some to handle. The economic climate further influenced the financial difficulty and many companies were unable to stay afloat.
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