Interest rate swap test-case updatePrint publication
Walker Morris’ earlier briefing explained that businessmen Rowley and Green had sought to pursue RBS for compensation following an interest rate swap deal that left them significantly out of pocket. The High Court held that RBS did not make any misstatements to Rowley and Green and did not provide any advice in connection with the interest rate swap, and as such the bank was not held liable for their losses. The case, which has been seen by some as something of a test case for the thousands of businesses that have accused Britain’s banks of financial mis-selling, was then referred to the Court of Appeal at the end of July.
Court of Appeal decision
The court’s written judgment has been reserved and is expected in the autumn but, whilst full details are awaited, we do already know that the Court of Appeal unanimously dismissed Rowley and Green’s appeal and endorsed the High Court’s decision. It is also clear that the decision in this case was very much fact-specific, and commentary to date suggests that the claimants and their representatives are keen to suggest that the decision is of limited wider application.
Nevertheless, the banks will no doubt be relieved that the Court of Appeal’s decision was in RBS’ favour, as the case will inevitably lead those contemplating embarking upon a mis-selling claim not to do so lightly. That should particularly be the case where potential claimants are, like Rowley and Green, sophisticated business people (as opposed to vulnerable, non-financial-expert consumers) who may have been more likely to receive information about financial products only, as opposed to advice.
The Court of Appeal’s written judgment is eagerly awaited as this will provide more detail as to the reasons behind the decision, in relation not only to the misstatement/advice point, but also to the question of limitation in claims of this type. It is also understood that the FCA, which is conducting a detailed review into various banks’ alleged mis-selling of complex financial products such as interest rate swaps, intervened in the case and delivered a detailed skeleton argument in which it explained the relevant regulatory rules to the court, as well as its interpretation of them. That explanation will be of interest to banks, potential claimants and advisors in the banking sector alike. Walker Morris will continue to report on developments and details in this case as they arise.