Scots firms could win more compensation from banks
An English court judgement could pave the way for Scottish companies to win more compensation from banks who mis-sold interest rate hedging products (IRHPs), law firm MBM Commercial has said.
The review wound down earlier this year after paying out £1.8 billion in compensation to around 14,000 small businesses across the UK.
However, the review was strongly criticised for giving the nine banks a leading role in reviewing their own misconduct.
Cat McLean, partner at MBM said a significant number of time-barred cases could now be brought against banks following a High Court ruling that allows companies to challenge the outcome of the banks’ review processes.
The ruling has allowed holiday park operator Suremime to challenge the amount of compensation awarded to it by Barclays after it was mis-sold an interest rate hedging product in 2008.
Ms McLean told The Herald newspaper: “It is now possible to argue that a bank breached its duty of care to carry out the review process fairly and reasonably.
“An awful lot of people in Scotland wanted to raise proceedings but couldn’t because they were time-barred, as they took out their swap in 2005 or 2006. This judgement might open up the possibility of suing a bank in a Scottish court.”
The revelation is most significant for firms which were categorised as ‘risk averse’ during the review, meaning their assumed losses were minimised.
Campaign group Bully Banks, which represents small- and medium-sized businesses affected by the misconduct of their bank, has said it will petition for judicial review of the compensation scheme.