Banks face up to £10bn hidden bill for swaps mis-selling

Banks face up to £10bn hidden bill for swaps mis-selling

Details of individual settlements have not been made public and the two court cases to have received judgments, both in favour of the bank, are not thought to be representative.

Hans Vrensen, global head of research at DTZ, said: “What these figures brought out is the quite significant mismatch between the loans taken out by borrowers and the swaps sold to them.”

Victims of interest rate hedge mis-selling complain that they were either sold products that never properly protected them against interest rate rises, while penalising them when rates fell, to others who claim they were forced into taking out contracts they never wanted that have ended up costing them hundreds or even millions of pounds in payments they were never warned about.

Those making claims against the banks range from some of the country’s smallest companies to multi-millionaire businessmen such as Lord Sugar.

The Financial Conduct Authority (FCA) last week released figures showing the progress of a redress scheme for the small business victims of swap mis-selling.

According to the FCA figures, Royal Bank of Scotland has potentially the largest exposure to swap mis-selling claims with more than 10,000 cases, more than Barclays, Lloyds Banking Group and HSBC combined.

RBS, which is 81pc owned by the state, has so far put aside £750m to meet swap mis-selling compensation costs, while Barclays has made a provision of £1.5bn.

The FCA redress scheme has controversially excluded thousands of claims on the basis that the businesses sold the products were sophisticated enough to have been aware of the risks.

Figures from the regulator show that 9,275 claims have so far been deemed to be from “sophisticated” individuals and businesses.

Lawyers have attempted to challenge a £10m cap rule that excludes any claimant with swaps totalling more than this amount.

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