Welsh farmers were urged today to check if they have been mis-sold a fixed rate loan account during the period 2006 to 2011.
“There are farmers who are discovering to their detriment that loans taken out during this period are not what they were meant to be,” said Farmers’ Union of Wales business development director Emyr James.
“A Fixed Interest Rate loan is a straightforward retail product whereby a rate of interest for your borrowing is agreed for a fixed period of time. A five per cent rate for 10 years means exactly that, a rate of five per cent fixed for the whole term.
“Problems arose when the clearing banks introduced investment bank products to the retail sector. In July 2012, the financial regulator branded the conduct of banks in the period running up to the crash as ‘unethical’, saying that in many cases staff at major lenders did not understand the products they were selling.”
The Financial Services Authority (FSA) believes banks suspended normal ethical standards and were selling products that were profitable for the investment banks, not well understood by the banking staff that were introducing them and not at all understood by the customers who were buying them.
“If you think you have been sold a product described as an Interest Rate Swap, Interest Rate Cap or Interest Rate Collar which you assumed to be a straightforward Fixed Interest Rate loan, you should ask your bank for a full explanation and discuss it with professional advisers, an accountant or solicitor,” Mr James added.
“Eleven of the UK’s largest banks, including Barclays, HSBC, Lloyds and RBS Group, have now agreed to compensate businesses where ‘hedging’ products (including Rate Swaps, Caps and Collars) have been mis-sold to small businesses considered to be non-sophisticated borrowers.
“The FSA estimates at least 28,000 such businesses have been sold interest rate swaps since 2001 and the banks have agreed to review their sales of hedging products amid allegations of serious mis-selling.
“I am convinced that there are borrowers within the agricultural sector who have been mis-sold hedging products but are unaware of the fact. If they have any doubts, they should make urgent enquiries and be prepared to make a complaint.
“They should bear in mind the Limitation Rule, which says that formal litigation against the bank for a case of mis-selling has to be made within six years of the date of signing the hedge.
“If they are close to this date they need to have their case assessed quickly and contact a solicitor who can register their claim before time runs out.“