Common problems

Many customers were informed that taking out these products would provide protection from rising interest rates, which had, by February 2008 climbed to 5.25%. However, as interest rates started to fall (and these have remained at a record 0.5% since March 2009) many business and individuals who purchased these products have been left facing high monthly repayments or breakage costs (which sometimes can be as much as 30% of the total borrowings) to terminate the contract.

The common feature of these complaints is that the bank failed to provide the customer with a `clear, fair and not misleading` explanation of the risks associated with the products. In these scenarios the salesperson may have highlighted the benefits but neglected to explain the potential danger inherent in the product. Entering into a transaction which does not prove beneficial does not, of itself, give rise to mis-selling and a claim for damages. There may have been mis-selling of these contracts depending upon a case by case assessment.

For further information, please contact Robert Morfee, Clare Harries or Catherine Zakarias-Welch