Interest rate mis-selling under the spotlight in judicial review
The Telegraph
25 January 2016

Interest rate mis-selling under the spotlight in judicial review

A landmark legal pursuit will this week challenge the banks’ £2bn compensation scheme for inappropriate interest rate swaps, in a hearing that could have consequences for more than ten thousand small businesses caught up in the mis-selling scandal.

Holmcroft, an Isle of Man property company, has brought a judicial review of Barclays’ compensation scheme that begins on Monday. The firm took out an interest rate hedge to shield itself against rising rates, only to suffer disastrous losses when rates fell.

While judicial reviews are rare and can only consider decisions made by public authorities, the courts have agreed to hear the case because the Financial Conduct Authority required the bank to set up the compensation scheme in 2012.

Barclays, along with its compensation reviewer KPMG, and the FCA are all expected to appear in court as part of the three-day hearing in London.

If the judges rule that KPMG's approach to reviewing compensation awards was irrational, outside of its powers, or unfair, it may order the firm and Barclays to revisit Holmcroft's compensation offer. The ruling could open the floodgates for other unhappy customers to bring similar cases.

Holmcroft Properties was awarded £500,000 but not compensated for several properties it lost when its swap went sour. The firm, represented by the law firm Mishcon de Reya, argues that KPMG had failed to ensure the redress scheme was fair, under terms governed by the FCA.

Mischon de Reya is also canvassing other victims to join a group litigation against the banks, after lining up millions of pounds in financial backing from a litigation funder.

Click here to read the full article.


Related links

City AM