British banks face landmark legal challenge over mis-selling of interest rate swaps
Britain's biggest banks are set to face yet another legal challenge tomorrow, when a hearing relating to the mis-selling of rate swap products begins in the Royal Courts of Justice.
The hearing, which is expected to last no more than three days, could have far-reaching implications for a multi-billion pound scheme to compensate victims of mis-sold interest rate swaps.
In 2012, the Financial Conduct Authority (FCA) instructed nine banks to nominate reviewers for their compensation schemes, and since then more than 11,000 firms have been paid £1.8bn in redress for selling products that led to big losses for smaller firms.
Lawyers for Holmcroft Properties, a nursing home operator, are expected to argue in administrative court tomorrow that KPMG, which was appointed by Barclays as an independent reviewer to oversee the compensation scheme, did not adequately compensate Holmcroft for its swap-related losses.
If the judges side with Holmcroft, the case could lead to dozens of other businesses also claiming that they were poorly compensated by independent reviewers. Mishcon de Reya, which is acting for Holmcroft, has said it already has litigation funding in place “to assist other businesses bring their own judicial reviews”.