Yorkshire businesses that were sold interest rate swap products linked to the benchmark LIBOR, are celebrating an important victory in the Court of Appeal.
Charles Abraham, head of dispute resolution at Last Cawthra Feather, said:
“In what is seen as a David vs Goliath fight, the Court today rejected an attempt by Barclays Bank to have a claim by Guardian Care Homes, thrown out before the trial in April next year.”
Guardian Care Homes, launched its £38 million claim against Barclays in 2012 for alleged mis-selling of two interest rate hedging products in 2007 and 2008.
It subsequently sought to add allegations connected with LIBOR fixing.
“The Financial Conduct Authority has already fined Barclays for their part in the LIBOR fixing scandal but today’s judgment keeps alive the prospect of senior Barclays’ personnel, including Bob Diamond, having to give evidence in Court about what they knew about the fixing of Libor rates.”
In its judgment, the Court ruled that Deutsche Bank would have to face similar claims from an Indian company, Unitech which has alleged it was mis-sold an interest rate hedging product.
“This dispute is regarded as a test case for LIBOR claims. Today’s judgment keeps the door open to hundreds of businesses in our region who may bring claims against Barclays, and other banks, based on Libor-rigging allegations.
“It’s a victory for ‘David’ who has won today’s battle but the business community will follow matters with interest to see if he eventually wins the war.”
Interest rate swaps were sold to bank customers with loans between 2001 and the onset of the global financial crisis in 2008, as a means of protection from rising interest rates that could cause loan repayments to become unaffordable.
It is estimated that this latest mis-selling scandal has affected up to 30,000 businesses in the UK, many of them in Yorkshire.