31/01/13

Banks gear up for 'messy war' in mis-selling battle

Neil and David Taylor, right, owners of Port Medway Marina

by business editor Trevor Sturgess

Banks are under pressure in what could be "a messy war" to compensate firms, including a Medway business, for mis-selling interest rate swaps.

Today’s ruling by the Financial Services Authority (FSA) was welcomed by the Federation of Small Businesses (FSB) and lawyers acting for Port Medway Marina.

The Rochester firm took out a swap deal and development loan with Barclays in 2006 when interest rates were on the rise.

But father-and-son founders David and Neil Taylor claim to have lost millions of pounds after rates plummeted. The scandal has been likened to the business equivalent of PPI (payment protection insurance) which was mis-sold to millions.

The FSA ruled that some 90% of these complex products were mis-sold to “unsophisticated” business people without financial expertise.

Although it has not yet disclosed the names of the firms affected, Berg, the law firm acting for Port Medway Marina, is confident that its client will be among them.

Solicitors will seek maximum compensation for Port Medway Marina from Barclays, claiming that potential growth was lost because of soaring repayments.

But Alison Loveday of Berg greeted the FSA decision with caution.

“This is not as clean cut as it appears,” she said.

“This isn’t the end of the battle, this is the start of a very messy war. There will be no quick solutions - there’s no way this will be sorted out to anybody’s satisfaction within six months if it has taken seven months to investigate and rule on just 173 of the estimated 40,000 cases. PPI took ten years.”

Roger House, FSB chairman for Kent and Medway, said the FSA findings were alarming. Redress was also unclear as banks would be deciding “consequential losses.”

He added: “Now the pressure is on the banks to contact its customers. They must do so quickly and decisively to draw a line under this matter and bring the situation to a close.”

Barclays pledged that “where we did not uphold the highest standards, we will put things right.”