It has come to light that there is a potential mis selling scandal about to break again. This time regarding the selling of interest rate swaps as part of loan agreements offered to small businesses. The fact that these were sold to businesses as opposed to individuals means the scandal will perhaps not be on the same scale as the PPI scandal
However, that does not mean it has been any less distressing for small businesses that have taken on interest rate swaps without fully understanding what they are buying. In essence the argument has been that these swaps were complex financial instruments and should not have been sold to small businesses. For instance did the small businesses realise that if the interest rate went down then the payments for their loan went up. Of course in 2007 when these were being sold many people never thought that interest rates would go down, but did they understand the risks? In some cases, post credit crunch, the loan repayments have doubled...!
In one instance we know of, the company has been issued a winding petition by their bank as well as the bank trying to enforce their security as a way to quickly kill this issue off.
If you feel you have been sold an interest rate swap product that was not properly explained to you and the bank is aggressively seeking repayment then we know a solicitor who specialises in interest rate swaps misselling. They will give you a free initial consultation.
The doubling of loan repayments because interest rates have gone down is definitely going to hammer cashflow!