Mis-sold Interest Rate Swap Agreements have been the subject of SME claims for several years now, with a 'voluntary' banking review process in place to consider such matters. Whilst many businesses have succeeded in recovering some financial loss through the review scheme or otherwise, the courts have been reluctant generally to award damages for consequential losses.
Now, we are seeing that many companies and individuals trading in foreign currencies may have been mis-sold Forex products with some form of hedging contract, intended to protect against adverse movements of currency rates but in fact exposing the company to significant financial risk. For example, a bank may have sold a simple 'forward contract' where a business buys or sells a foreign currency at the current fixed price.
Whilst intentions may have been good, many of these products were volatile and speculative at best, exposing the company to considerable risk and potential liability. The products were complex and often not explained properly so that the business did not understand what it was buying or the potential level of risk.
What might the bank have done wrong?
They may have failed to explain fully:
- How the product worked;
- That there could be considerable adverse financial implications;
- That there may be large exit fees to get out of the contract so that the customer fully understood the risk.
They may have also:
- Over-hedged by failing to tie the agreement in to the same amounts and duration of underlying loans;
- Given 'advice' instead of simply executing a sale in accordance with the contract 'basis' clause;
- Failed to consider the suitability of the product for the customer's needs.
In such circumstances the Forex product may have been mis-sold and the company entitled to claim its immediate losses which may include additional interest paid as well as large exit fees to get out of the agreement.
In addition, and generally unlike IRHP claims, the company may be able to recover compensation for consequential losses.
These could include:
- Losses incurred as a result of limited or no funds to reinvest;
- Loss of profit;
- Refinancing costs.
There are time limits to bring a professional negligence claim. You have 6 years from the act of negligence or 3 years from the date of knowledge to start court proceedings for a claim for professional negligence. The test for ascertaining the date of knowledge is when a reasonable person ought to have realised that there was a risk that negligence had occurred. There is a long stop date of 15 years from the act of negligence after which a claim may not be brought regardless of the date of knowledge. If you do not bring your claim in time, then your claim will usually be lost forever.
How we can help
Seth Lovis & Co's Financial Services Litigation department has considerable experience acting for individuals and SMEs in mis-sold financial product litigation. We understand the huge impact the crippling repayments and large exit fees under the hedging agreements can have on your business and will do all we can to obtain redress via either negotiations or litigation through the courts.
Funding a Mis-Sold Forex Product Claim
We have various options for funding your claim to suit your needs.
If you or your company believes it may have been mis-sold a Foreign Exchange (Forex) Financial Product, contact our specialist Financial Services Litigation team for a no-obligation discussion on 0330 134 2582 or email us at email@example.com