An interesting first day before Lord Hodge in the interest rate swap mis-selling case of Grant Estates v RBS: according to the bank’s own Counsel, Royal Bank of Scotland business bankers were acting purely "as salesmen" when they introduced small businesses to interest rate swaps. Indeed, he went on to say that relationship managers had no responsibility for any opinions they may have given.
In the Grant Estates case, communications from the bank had made it clear to the company that the bank would not act as the recipient's adviser, and included disclaimers that "no reliance may be placed on RBS for advice of any sort".
Lord Hodge asked whether this meant that opinions from bank staff had to be treated as salesmanship rather than advice, adding that what was envisaged was that a member of the bank's staff could express an opinion and could even provide research and analysis, but that was to be treated with caution by the customer. IN response, Alistair Clark QC for the bank confirmed that any such member of staff was simply acting as a salesperson.
Crucially in Grant Estate’s case, they had been induced to enter into a swap because it had been suggested to them that interest rates were likely to rise. However, on the day the swap agreement was entered into in December 2007, interest rates actually began to fall.
The case is continuing before Lord Hodge this week and is expected to finish on Friday: we will keep you updated as it progresses.