Father and son team at Port Medway Marina await outcome of case which could cost them millions
Neil and David Taylor,
right, owners of Port Medway Marina
A father and son who run a marina business are anxiously
awaiting a ruling on the alleged miss-selling by banks of an
interest rate swap product they claim has cost the firm millions of
Port Medway Marina. based in Rochester and founded by David and
Neil Taylor, is one of many enterprises complaining about the
product that cost "an absolute fortune" when interest rates
The Taylors say the impact has been horrendous. Their situation
is being investigated by the Financial Services Authority
Although most banks sold similar products, the Taylors took out
their loan with Barclays in 2006.
It had been a flourishing business for 20 years until the bank
persuaded them to take up the complex product alongside a business
Between 2003 and 2006, base rate rose from 3.75% to 5.75%. But a
few years later, following the credit crunch and widespread
financial collapse, it had plummeted to the present 0.5%.
Kalvin Chapman, a solicitor with Berg, a law firm fighting Port
Medway’s case, said the products were sold to small and medium
enterprises (SMEs), many “unsophisticated” in their financial
expertise, in the bank’s own interest, not the client’s.
“They shoved it down SME throats like PPI [payment protection
insurance],” he said. “As soon as interest rates go down, the
amount you pay under an interest rate swap goes up."
He said that
apart from the product costing “an absolute fortune” if rates
dropped, banks also imposed a high exit fee.
The Taylors estimate that they have lost business worth as much
as £15m because escalating repayments curbed their ability to
invest for growth.
Neil Taylor said: “The swap we took out in 2006 effectively
stopped us being able to borrow the money required to grow the
"Due to the excessive extra costs from the swap it also meant
that we couldn’t move to another bank which would give us the money
we needed to grow.
“The impact has been horrendous. Not only could we not grow the
business, we have had to lay off staff, sell off assets cheap, and
try to find ways to cover our cashflow.
“This all started when some ‘experts’ came down from London who
apparently knew everything about these products; they forced us
into taking this product as part of the new funding we required at
The Taylors and their advisers believe the business could have
been double its current size of six staff and £500,000 turnover had
they not been anchored down by the interest rate swap.
The FSA is due to rule tomorrow. Mr Chapman said: “My dream
outcome is that the FSA will force the banks to do a proper and
realistic review of the scale of damage the hedging products have
done to business. The damage has been catastrophic.”
A Barclays spokesman said: "Barclays has an ongoing dialogue
with the management team at Port Medway and continues to work with
them to support their company through challenging market
"When we receive the FSA's approval, we will launch the review
for eligible customers. Where we did not uphold the highest
standards, we will put things right."