Barclays Capital - Rate swaps.

[BARNSLEY 1]

We received the same documents i.e. Powerpoint Presentation & Confirmation Notice (no ISDN Master Agreement attached). There was no other documentation provided.

 

Seems like this was the normal procedure.

[Madmountainman]

Hi

We have also been sold two of these swaps both for £500k protection over 15 years in 2007 one to a Limited Co and the other to a partnership. Both Property investment businesses.

I have no complaint about the interest rate hedge however am very annoyed how we have been treated by Barclays since.

Our loans were set up on a short term basis as we were told this was standard practice. We were charged a fee at the outset and told we would not pay fees on renewal! Our loans were on an interest only basis and I would argue if you had a capital repayment loan that this derivative was certainly not suitable for you. On renewal in Sept 2009 we were told that we had failed the banks new loan criteria and were to be moved to business support for our Ltd Company (the partnership is due to come up for renewal soon) At first we were told that all of the debt would be moved to capital repayment basis I have succesfully argued that only the debt above the swap should be capital repayment and we have been given two loans of 5 year terms one interest only the other capital repayment. we have been charged just short of £30,000 for renewing a debt of just over £1mil and our margin has been doubled.

My issues are how could the bank sell me a 15 year term swap when i had a short term loan and is refusing to extend my loan for the same term as the swap. As the bank told me by hedging it would make me more secure in its eyes how come I have been moved to bus support been charged a massive fee and had my margin doubled when I have never defaulted on any payment!

Would welcome any advice and thoughts

Thanks

[slick132]

Hi MadMM and welcome to CAG.

 

I'll leave you to hear from Grange or one of the other contributors on this thread.

 

[leeby]

Hi Everyone,

 

I today received a reply from Barclays, in reply to my complaint as that is the first port of call. As expected they cover themselves all the way and clearly point out that it was my fault for agreeing to the deal. They also claim that the FSMA Article 21 which states restruictions on financial promotions - They do not apply to Barclays as apparantly they are authorised and therefore they have NOT breached article 19 of the FSMA.

They then went on to explain who telephoned me and what was said, I was actually teleophoned three times and emaisl the presentation three times all from different people. The letter confirms it was all "Oral" agreements.

 

They also claim the following:

 

"Moreover, in the conformation dated 14th Feb 2008, you represent that "[you are] capable of assesing the merits of and understanding (on [your] own behalf or through independant professional advice, and understand and accept, the terms, conditions and risks of the transaction."

 

For the record -I am a sole trader / independant.

 

They go on by adding "Barclays are now surprised that I nowe assert that I did not understand." Maybe Barclays should take a look at this forum and see how meny others simply did not understand.

 

If anyone has any updates please get in touch!

Best regards

 

Lee

[grange1971]

Hi all,

 

leeby - of course they are 'authorised' under Section 21, it states that only Authorised persons can sell the product. This is nothing to do with Article 19 per se, which covers who they can sell TO.

 

An easy example - a landlord has to hold a personal license to sell alcohol to customers, yet the law says they cannot sell to under 18's. Its no defence to say ' I am licensed, therefore I have done no wrong.'

 

The confirmation they refer to....was this received AFTER the call authorising the swap, if so its a bit late for a disclaimer, it sounds like something that should have been receiver PRIOR to the swap.

 

Mountainman - when they said you had failed the banks loan criteria....was this because of the value of the 'contingent liability' being added in to your LTV ratio? Thats been a common move recently, just more profit taking on their part.

 

In relation to the ISDA Master Agreement:

 

This is a commercial deal, therefore both parties are seen as having the same access to resources. If Barclays refer to a specific ISDA Agreement, then they do not have to provide it, its down to you to source it.

 

Generally, I have not heard of any problems obtaining these from Barclays if you ask for them, to be honest its not really where your complaint will be based - you will be better looking up the FSMA 2000 Financial Promotion Order 2001. This is what Leeby is referring to above.

 

If a rate swap is linked to a repayment loan then the swap should be written as reducing in line with the loan, otherwise you have an 'overhang'.

 

Thats fine in theory, but I am of the opinion that some salesmen simply made the plans up as they went along.

 

Regards

 

Grange

[BARNSLEY 1]

Dear All,

 

Can anyone give me advise about what methods of recourse that are available to companies that are too large to be considered "micro-businesses" i.e. where their turnover is greater than 2M euros or they employ more than 10 staff?

 

It is my understanding that I cannot complain to the Financial Ombudsman. What options do I have?

 

Regards,

 

Barnsley 1.

[grange1971]

Hi,

 

The FOS criteria is turnover less than £1m, anything above that will result in the bank disputing the FOS right to investigate - after which the FOS will not get involved (its one of the off-shoots of the banks winning their unfair charges claims with the supreme court).

 

I will also add that recently partnerships including limited companies, with a turnover in excess of £1m, but with 2 or more partners, have also been turned down by the FOS - they do not allow the turnover to be divided up in order to qualify as less than £1m.

 

Barnsley.....

 

Your only option will be to contact a solicitor who is experienced in these matters and does not have a conflict of interest. I know of one who will act, pm me for more info, but the cost is obviously high as its a London company.

 

Did you receive back the paperwork I suggested you ask for?

 

Cheers

[NE38]

Hi

 

Does any one have an update on any of their cases against Barclays or Hsbc, I too was sold an interest rate swap from Hsbc in Nov 2006.

I asked for a get out figure and was told £600000, my swap is for £2000000, initially 10 year term extendable to 15 by Hsbc alone.

On reading this thread My circumstances of sale appear very similar, no explanation of exit fees, no terms and conditions given, no commission disclosure from the "Treasury" sales man who came from Edinburgh just to see me !!.

I am looking to try and get out if possible so any information would be gratefuly received.

 

Thanks

[grange1971]

At present all my paperwork is with the FOS still......

 

My suggestion would be that, given the figures, you make contact with a solicitor competent in these derivatives, at the very least you should get an initial appraisal free of charge - there are two I have spoken to who seem competent, they should spot any flaws.

 

I'm assuming that your turnover/net book value are both over £1m., so the FOS doesnt apply.

 

If you wish I can pm you some contact details, although dont agree to anyone charging for an initial appraisal.

 

Pete

[Ellis Jones Solicitors]

An interesting FT article for you all:-

 

Banks face wave of mis-selling claims

By Jonathan Moules

Published: June 4 2010 16:52 | Last updated: June 4 2010 16:52

A wave of legal cases is being prepared against several high street banks over the selling of interest rate swaps that have, since the record fall in the Bank of England’s base rate, left hundreds of businesses struggling to meet payments.

Interest rate swaps are derivative contracts that allow businesses to swap a variable interest rate loan facility for a fixed rate for a certain period.

Lawyers claim that their clients believe they were mis-sold these products because lenders did not properly inform them of the risks or the six-figure fees that had to be paid to get out of the arrangements.

Many of those persuaded to move from variable rate loan facilities to derivative products are struggling to keep paying off debts ranging from £500,000 to £10m.

Stephen Rosen, a partner at London-based solicitors Collyer Bristow, said he believed that hundreds of businesses had been affected. His firm had received calls from anxious business owners from Cornwall to Hartlepool. “People feel they have been cheated”, Rosen said.

Stuart Brothers, a senior partner with Newport-based SRBlegal Business Lawyers, is preparing cases for more than 30 disgruntled company owners. “We believe there has been widespread mis-selling,” he said.

One case is being brought by a nursing home owner, who claims that she is resorting to legal action because otherwise she will be stuck with a £570,000 loan at 6.25 per cent interest, with a £114,000 exit fee.

Daniel Hunter of Barclays said: “We encourage any client who is unhappy with any product or service of ours to discuss it with us so that we can thoroughly review their complaint on a case by case basis.”

[Cornwall 01]

Hi,

I have also had a visit from the vice president of Barclays capital last week and my exit fee was £128k at the beginning of August and now the exit fee is £150k. Was wondering how you are getting on with your complaint?

[BARNSLEY 1]

Barclays' did not address properly my complaint of mis-selling.

 

Because we do not satisfy the criteria for my case to be reviewed by FOS I have engaged a lawyer to act on my behalf. Please note that there are lawyers who will consider acting on a no win, no fee basis for these cases and you might want to consider this route depending on the size of your claim and/or the depth of your pocket.

 

I suggest that you pay to obtain a risk assessment completed by an lawyer with experience in this field.

 

The more I find out about this situation the more I can see that Barclays Capital have acted in a concerted way to induce clients (without the relevant financial knowledge) into taking highly risky/speculative investments in the belief that they were reducing the risk to their business. Key documents that might have highlighted these risk were systematically omitted.

 

What Barclays Capital has done is a disgrace and they should not be allowed to get away with it!

[Ronster1]

Hello everybody.

 

Myself and my wife are in the same boat as everybody here having unfortunately been introduced to Barclays Capital by our relationship manager.

 

We are currently complaining to the FOS which we can do being a tiny concern.

 

I just wanted to remark on Grange1971's comments of 15th Feb 2010 concerning the ISDA Master Agreement not being attached to the confirmation.

 

Apparently in order to incorporate documents and clauses by reference, which is what Barclays claim they have done, you have to have done everything that is "reasonably sufficient" to bring to the attention of the other party the clauses you are hoping to incorporate.

 

The more complex the clauses the more you have to do for it to be sufficient and certainly the more onerous the clause (such as the exit fee clause) they must be certain the other party knows about it.

 

There are stated cases surrounding this aspect of law some very similar to our scenarios where documents containg clauses and said to be attached were in fact never sent. The courts have ruled that this was insufficient to incorporate the clauses and so the contract was null and void.

 

If you look incorporation up in Google I'm sure you will find a wealth of material to research, Brewers (law firm) have a fine article on it all.

 

Please note this is not just my amateurish ramblings, both my solicitor and barrister picked up this argument straight away after they had seen my shoddy paperwork from Barclays Capital. There are other issues as well, Conduct of Business rules being one, but do not discount the insufficient incorporation of the ISDA and Definitions as a line of attack.

 

I hope this helps.

[Jennifer Cockerton]

I have just read the articles relating to the Braclays swap. I was sold a swap under great pressure and didnt receive the full articles as previously mentioned. Has anyone won! I think we are all stuffed and they know it!

[Ennill]

I am in the same boat, having ended up with an HSBC swap product which I didn't want, and to cut a long story short, it was closed (I dispute permission was given to close - had said they could close it if it was of no cost to me) and I now owe £80,000 (a lot more when they add the interest for the past 2 years). Currently my case is with the FO - it has taken nearly 2 years for them to make a decision (which has gone against me). The first FO employee to take the case phoned after a many months to say she was near a decision, then she wrote to say she had been promoted and the case passed on someone else who eventually got in touch, but then she was taken ill and the case passed on again...

 

My head is spinning at the moment trying to google and get any sort of information/evidence I can for my appeal, but the FO seem to base their findings on existing paperwork/taped calls (the recording of one very very important phone call (in my favour) cannot be produced due to 'technical reasons'....) There is a lot more to my story - like a lot of you I've been hardworking and can't believe the position I find myself in - as far as I am concerned (yes I am bitter right now but will go down fighting) I feel I have been robbed by my bank of 37 years of not just £80,000+ but also a retirement.

 

If anyone else in the same position wants to pick my brain re what happened, and what I am now learning about how the FO works (which is not a lot I am afraid), please feel free to e-mail me on - sorry site says I need to have 20 counts or greater to include the e-mail address.

[slick132]

Hi Ennil and welcome to CAG.

 

The FOS are often useless and the feeling is they are overtly biased in favour of the banks, who also happen to fund them.

 

You shouldn't put your email address on threads in any event, regardless of whether you have 20 or more posts.

 

If you want to send a PM (private message) to other users, click on their username and select SEND MESSAGE.

 

8-)

[Ennill]

Thanks for reply, very sensible not to put e-mails on here - but you get so angry and incensed don't you! Sometimes you don't think straight when you have so many things you want to get off your mind so to speak

[Ennill]

I should really be in bed, but then I get so angry about the whole situation, I find myself on the pc just trying to work out the legal jargon for this and that. Whatever, if I lose my case, which I am quite resigned to now - I don't have paperwork - I trusted my bank - I am going to be a thorn in their side as long as I live - I owe them that -lol

[Ennill]

And I intent living to at least 100 years....

[slick132]

Hi Jennifer C and welcome to CAG.

 

Hi Ennill, I hope you will get the justice you deserve.

 

To JC and to Ennill, I hope one of the main posters on this thread will be able to comment and help you further.

 

8)

[samhux]

I found a great video on Youtube, posted by SRBLegal Business Lawyers, which explains everything about rate swaps. I didn't realise how much I didn't know about rate swaps until I watched this video. I now consider myself a bit of an expert!!

 

If you type in SRBLegal on Youtube its the first video or go to srblegal.co.uk and click on Interest Rate Swaps.

 

Really good stuff

[ramesh sabberwal]

We are going through a similar situation. Barclays sold a swap and then just before interest rates plummeted changed our swap again. We are paying in excess of 54,000 p.a. and have commenced informal discussions to try and resolve this.We have also sought legal advice. I note your comment dates back to 6th July 2009. Any joy so far?

 

Many Thanks for raising an issue which is clearly hurting many businesses.

 

Ramesh

[ramesh sabberwal]

Hi Pete,

 

I have now received an email from the Barclays Legal Team advising me to meet to representatives of Barclays. Interestingly one of them is a business support manager. I am perplexed by this as I thought that once something goes to the legal department the legal department concludes it's own investigations. However if what happened to Leeby is anything to go by, in all probability we will get a rough ride.

 

However as things stand we are determined to take this matter to it's logical conclusion and have already touched base with our solicitors.

 

Interestingly does anyone know what happened to Leeby?

 

Regards

Ramesh

[grange1971]

I am aware of several folks who have reached the point of instructing solicitors, and many who have found the fos of no value whatsoever in these complaints, including myself.

 

I am not aware of a single person who has had any redress from any financial institution selling these products, but I would be interested to be told otherwise!

 

Please feel free to pm me if you have had any success - I am aware that where the banks (not a specific one) have come to commercial agreements ie turning the breakage payment into a loan at more attractive margins, there has been a 'no bad publicity' clause inserted, so I understand that folks may not feel inclined to make public posts.

 

As for me, well, looks like our broker is culpable - if your loan was brokered, or organised by an accountant then they may actually be your first port of call, dont discount their involvement and liability.

 

Cheers.

[ramesh sabberwal]

Simplistically a hedge is like a bet on interest rates. If the bet goes wrong you loose money and if it goes right you win money. In all honesty I can't see where the redress is going to come from. Even though what the bank has done is unethical and immoral I am yet to come across any case law in this respect. Recently I also read an interesting article in which it stated that Italian Municipal Corporations, many of whom had hedging agreements, attempted to block a move by some big banks to have the cases moved to London. The reason why the banks want the case moved to London is that the UK has always had bank friendly laws!!.