Interest Rate Hedging claim – mis-sold swap and the application of COBS
James Taylor, with specialist counsel John Virgo and Holly Doyle of Guildhall Chambers, recently acted in a claim against National Westminster Bank plc where its private retail customer claimed that he had been mis-sold an interest rate swap in 2008.
The bank fought the claim all the way to trial but after the Claimant's evidence finished, as evidence was being heard from the Claimant's relationship manager, the Bank accepted the Claimant's final and substantial part 36 offer to bring the claim to a successful conclusion.
The claim could, had it progressed further, have provided an interesting judgment for lawyers acting for Banks and for customers on the extent to which the FSA's COBS rules apply to the sale of such products to private retail clients as opposed to limited companies. These rules impose their own code on regulated financial services providers to ensure that sales made are suitable for the client's needs. Recent claims by limited companies against banks have foundered on various exclusion clauses, where COBS does not apply to sales to corporate customers in the same way as to private individuals.
"This is another example of a Bank forcing a claimant all the way to the door of the court and beyond before abandoning its defence and compensating him for the mis-selling of an interest rate hedging product" said John Virgo.
James Taylor pointed out that Claimants need to be resourced and determined in order to secure a just outcome in circumstances where they are facing litigation against a well-resourced and difficult opponent, and paid tribute to the determination of the Claimant to see the matter through.