It is indeed good news....for the banks. FSA have identified a large percentage of mis-selling in the 50 cases they examined, so they have handed the investigation over to....the banks. An unbelievable cop out. A large part of the complaint is that the banks arent investigating complaints thoroughly - Barclays have already said they will do as the FSA ask, but that they anticipate a very small level of genuine mis-selling cases to be uncovered. I'll bet. I previously mentioned a pressure group was needed, well one has formed and is doing sterling work, google Bully Banks to find their (free) site. Cheers all. A2G

Thats about the same as my experience with then, complete waste of time in these matters - the view they take that this is a commercial deal, and thus both parties are considered equal in ability etc, is completely contradicted by the many individual conplainants I have spoken to, who have clearly had their inexperience taken advantage of. As said though, they have clearly stated that the terms fixed rate and interest rate hedge are not interchangeable, there are definitely some uneasy brokers at the moment. An action group, headed by someone who isnt on a gagging condition in their loans, with its own members website and private forum is what is needed - I'm sure the handful of solicitors taking on these cases, and the financial people offering consultancies, would be happy to advertise and pay the website fees! Cheers A2G

The case at Bristol Mercantile was dealt with by SRBlegal of Newport. Until recently they offered a free intital review of a complaint, but its now a £1000.00 plus vat fee due to them being swamped. There has been a lot of press recently - The Telegraph are running a series of articles on the issue, all pretty much anti-bank. As mentioned previously, there are a couple of documents the banks must complete prior to the swap taking place - the cases settled are as a result of the banks not doing their compliance paperwork properly - this left the client still classed as a non-investment professional and unsuitable to be sold the product, hence the banks had to back down. If you took the swap as a sole trader or partnership, you should put in a data protection act notice to your bank, asking for copies of everything they have relating to you, then you need to go through it with a fine tooth comb, or get someone else to do it for you. If you are a limited company the dpa doesnt apply to you - but you should still write to the bank asking for copies of the compliance paperwork - chances are if they have it they will send it to you, it does tend to indicate they are currently watertight. FOS ? Complete waste of time - its free, and you get what you pay for. Are the banks reading this forum - yes they are. How do I know - because in my pile of dpa paperwork from the bank was a print out of my comments on this thread....... The FSA are currently reviewing the systems used by the banks to sell the poducts - in particular the use of advice of compliance paperwork plus the presentation handed to the client, when combined these two allow the banks to avoid the 'investment professional' issue. However......under the 2001 regs they couldnt do this, under the 2005 regs they can - and who changed the regs? Government after consulting with the FSA.............. Dont overlook the involvement of third parties. If you had a loan brokered for you by a financial advisor, then you may also have a claim against them - particularily if you asked them for a fixed rate loan and you were given a rate swap on the basis it was the same thing - the one thing the FOS are adamant on is that the term Interest Rate Hedge (aka rate swap) CAN NOT be considered a Fixed Rate, it may achieve similar results but it is definitely not the same thing. The FOS normally use this to defeat complaints - ie the terms of the loan stipulated an interest rate hedge, not a fixed rate, so you shouldnt have taken the loan if it wasnt what you wanted. This is the bit that may assist in claiming from a broker - if their own paperwork only mentions fixed rate loans, yet they negotiate a deal that includes a Hedge then they have not arranged what you asked for, nor have they advised you in relation to the hedge. As regards a group action, its not going to happen due to individual nature of the dealls. What you could consider is forming an action group, everyone put a bit of money in the pot and use a solicitor to cherry pick the best cases. There are a few small groups already in existence, but its very time consuming and whoever runs it will find it takes over your life. There is also the issue of continuing to deal with the banks, you can quote me all the banking agreements you want, but I can give you speciific examples of peoples lifes being made very hard once they start to complain - businesses being handed over to the 'Recovery Unit' is the standard practice. Dont make the mistake of thinking that Recovery means they want your business to recover - Recovery means that the bank wishes to recover all the debts it thinks you owe it, going over to them is a harsh time indeed. So what should you do? Firstly, you need every piece of paperwork relating to your swap. The presentation they gave you. A copy of the advice of compliance form. Your bank mandate. The advice of compliance form must be signed in accordance with the bank mandate. If you have them, consider starting a group where you can pool your knowledge and individual experiences, there are tens of thousands in the same boat as you at the moment, you are not suffering alone. All2lgain

Ps If anyone has a link to the 2005 FSMAct I'd appreciate it, cant find anything other than the 2001 Act, which isnt relevant. Cheers A2G Okay, ignore above, here it is......http://www.legislation.gov.uk/uksi/2005/1529/contents/made Now just need to read it.

I'd like to add something in relation to due diligence. the banks have to complete and 'Advice of Compliance' form in order to proceed with the swap.....for this they MUST have two things, firstly a signed FSA Risk Warning Notice signed by the counterparty (us!), and also a signed Bank Mandate. The FSA Risk warning notice states that all counterparties should sign....but if the bank mandate says only one signature is needed, then the fos accept that as overiding the FSA Risk notice. Paperwork is the crucial thing here - if you dont have either of the above, ask the bank to supply you copies to prove you signed them. Chances are they will do this without a data protection notice. Cheers A2G

I also saw the article - bit concerned as they mention investment professionals (these were included in the 2001 Act but this protection seemed to disappear with the 2005 Act). Go back a couple of years - Barclays bucked the trend and posted multi billion profits - this was their windfall from selling swaps. Madmountainman.....xelo means bank base rate (as published monthly) as opposed to Libor rate. We need a precedent at court to start the avalanche (FOS will not support us, although interestingly in the sky news article HSBC say 'very few' complaints upheld by FOS.....i wasnt aware of any at all, hmmm wonder what the details of those are?) Cheers all2lgain

Thanks for your input. Its pretty much one of two issues that folks are complaining about, Firstly (and this is the most common), cost to break the swap. A swap is fixed at 5% to 6%, based on the base rate. With the base rate currently 0.5%, the cost to break is also virtually 5% to 6%, over the length of the remaining period. Its a bit like trying to pay off a loan, and being asked to pay all of the remaining payments up front in order to exit the debt. This comes as a big surprise to the vast majority, which tells me that the banks dont highlight it enough, and that the banks are targeting small businesses who are naive in these matters - then hiding behind the very due-diligence you mention. Secondly (less common, but seen a lot more this last year), banks are reviewing the loan to value ratio by adding outstanding loan and then potential breakage cost together (even if no break is being sought), and increasing fees, putting business into hands of 'recovery units' etc etc. I note your thoughts on ISDA agreements, and agree that is what people are entitled to expect, but it isnt what has happened - in addition, where a counterparty (ie us, not the bank), requests a break, the banks are refusing, even when the ISDA agreement says they MUST break ie prepayments and counterpaty confirms a break is required. The FOS arent interested, its a commercial deal between two businesses, regardless of how large one is or small the other is. In relation to due diligence and risk profiling, I have copies of the forms issued by the main player in these - an example to whet your appetite.........in a partnership, both partners required to sign according to bank rate swap paperwork, but only one does, second refuses pointblank and explains they do not understand the product and dont want it. Bank carry out the swap, regardless of second partners wish not to (in interview the bank salesman even states they accept that the second partner did not understand or want the product.) The FOS decision in relation to an unauthorised swap.......despite the bank failing to carry out a proper due diligence in relation to the unsigned authorisation, the partnerships normal cheque mandate only required one signature, so the bank did nothing wrong in accepting one signature in relation to the swap. I've got loads of other examples, not just people caught out by the drop to 0.5% in base rates, but situations where the banks have used old-school boilerhouse selling techniques....all made possible, if not ethical, by the 2005 changes to the Act covering these products. What I would like to find is a case of a private individual being sold one of these on a non-commercial basis, ie to support a domestic mortgage or similar, but thats what the banks due diligence is there for, to protect the bank from such a mis-selling complaint (no 'equal-party' status in that scenario!). Dont be disheartened by my reply, its pleasant to have someone posting who isnt trying to sell a service (there are plenty of ex-bank folks about who suggest they might have the answer, for only a small fee......or solicitors who suggest that thay have mysteriously 'negotiated' a way out of the problem), we can never have too many people with inside knowledge, so welcome aboard our happy little ship! Regards A2G

Am I right in thinking that a post has been deleted - it looks like 42man is talking to me...... The FOS is a waste of time in relation to Rate Swaps, they view them as commercial deals by two equal parties, that will remain the case until a court case overturns the situation. So what we need is a single succesful court decision. I'll repeat what I said earlier, I would love to hear from anyone who has had a mis-selling complaint upheld by the FOS. A2G

The Deutsche Bank ruling is indeed good news, it is probably the first time a European Court has ruled against a Bank. I dont know if Deutsche Bank have appealed, probably not as they were a small player and their losses are sustainable. To date, I still havent heard of a single FO decision going against a bank, I've spoked to solicitors and some of the emerging 'experts' who promise to fight for sufferers (at a cost...). I know of one sufferer who has engaged sols. and it has taken best part of 2 years to get virtually nowhere. Sorry to hear things are getting worse Barnsley, they really are evil EDITS. A2G

Ok, Prior to 2005, this particular type of over-the-counter derivative deal was only available to a specific list of investment professionals - the banks would get creamed by regulators if they traded with anyone else - the list is very specific and 'normal' businesses were not included. This is covered by the FSMA ACT (2001). In 2005 the dear old chancellor (remember him? anyone suffering from these deals should curse the man) decided to completely remove the restrictions on sale - the only proviso being that it is a commercial transaction ie a private person cannot take a rate swap. Even this protection was really for the banks benefit - in a commercial deal both parties are equal in either knowledge or the ability to obtain knowledge, so mis-selling doesnt apply, however, in a trade with a private individual the bank would be at a disadvantage as the private individual, when they found they had been ripped off, could rightly say they could not be expected to have the same level of knowledge and would have to be compensated. The new regs were in the FSMA Act 2005. I tend to disagree that the banks knew rates would plummet - what has happened though is that some of them (Barclays in the main, but others as well) have found themselves holding some great deals and have profited beyond belief - its the success of these deals that got Mr.Diamond his job, but also got Barclays Capital known as Barclays Casino. A truly dreadful product. Regards. A2G

Pete Depends where in the complaint system you are, if its right at the beginning then its going to be a fishing expedition, they want to know if you have the basis for a mis-sale (almost certainly not), if they dont have anything to worry about then its time for them to get the calculators out and work out a 'restructure'.....see my previous comments as to who really benefits. The next person up the chain of complaints will be their boss, who is of course impartial..... Forget complaining, its a waste of time, you need to approach this as a negotiation - albeit you are at a disadvantage as you are already tied into a deal. Good luck A2G

You need to read the FSMA Act (2005 version - NOT the 2001 version which is most common on the internet. I think you will be shocked - the banks have to prove 2 things: they are an authorised body under that act the salesman was authorised by the bank to sell them. Thats all they have to prove. Full stop. These products are virtually unregulated from 2005 - due diligence, expalnation etc etc - not a single one of these has to be covered. Its a commercial deal , the onus is entirely on you to decide if its suitable or not. The second point above is important - your relationship manager is unlikely to be authorised - normally they put you on the phone to someone from Barcap who actually does the deal, this is recorded. Sorry to be negative, I'm genuinely on your side, but I have yet to hear of a single genuine case of a bank either being ruled against by the FSA, or by a court - I have seen several legal companies taking more money off people with promises of redress, and I'd love to hear of a success, but generally the way out is by negotiation, and this will have a confidentiality clause somewhere, hence none of the posters who have done deals talk about it anymore! More than happy to be proved wrong! A2G

Tbh, your financial adviser wouldnt have understood it either. Pre-2005 you couldnt be sold these due to their complexity and risk, as a result they were virtually unknown amongst investment professionals outside of certain activities. The banks piled in in 2006 and they were a big seller for them - the so called 'no cost' element was used as a major selling point. No cost to get into, everything you possess to get out of! Let us know how you got on with your meeting, pm if necessary.

They will probably suggest restructuring the swap, in order to reduce your monthly payments. Bear in mind that when they do this, they fix your debt (its often called a breakage cost) at that point, in doing so you wont get the benefit of the impending base rate rises. This is why they are now so willing to offer 'commercial deals' - if you wait and the rates go up, your swap payment will reduce and the overall value to them reduces.....whereas if they can set the breakage cost now, the overall value to them is the same. The banks should be factoring in a rate rise when they put together their proposals to you, the problem is that there is no way that anyone can actually check their figures, apparently the formula are so complex no-one outside the bank is allowed to know it, in case they get really confused..... Ask them if they have factored in rate rises, where they see base rate in 1 year, 2 year, etc etc, and then its up to you to judge if you agree with them - this is a straighforward casino product, no skill, just pure guesswork. And remember.....as you already have a rate swap product, its a commercial deal, there are absolutely no restrictions on them, if they rip you off again....tough. I cannot think of a less suitable product for anyone, ever. If a broker negotiated your original deal, or an accountant, look for compensation under the FSA scheme. Good luck.

Poker That sounds like a deal they call a 'double-floor' - once the base rate hits a certain point, for every percentage point it goes down further, your rate goes up. Sound about right? If the deal was before 2005 when the FSMA rules were completely removed then you may have a complaint, if it was after that then the rules allow the banks virtually a free hand. Wait and see what happens with your complaint - nothing probably - see if they offer any sort of commercial deal. I know some pretty big businesses who have been hammered by these deals. A2G