We have been closely following a number of cases where it is being argued by those acting on behalf of borrowers with interest rate swap miss-selling claims that by artificially fixing Libor (the interbank lending rate) implied terms in the swap agreement as to the rates accuracy were breaches, and as a result the agreements can be set aside.
Guardian Care Homes v Barclays is currently making its way through the Courts. The Pursuers have sought information from the Bank as to their knowledge of the rate fixing. Order for the disclosure of this information have been granted. The judge said that it “just seems perfectly obvious… that the people responsible for giving those instructions must have known customers were being misled” and ordered the release of the information. Employees linked to the rate fixing have asked the Court for anonymity and last week that request was refused.
As this case progresses it will be interesting to find out how widely known the rate-fixing activity was within Barclays. That said the ramifications of the pursuers winning this case are enormous for Barclays (and other banks embroiled in this sort of rate fixing). Hundreds of thousands of financial instruments (and not just those that were allegedly miss-sold) could be set aside. We would imagine that Barclays are thinking very hard about a settlement out of Court.