Posted on Aug 19, 2012 by | 0 Comments
The Royal Bank of Scotland is expected to advise customers that the mis-selling review may take “up to 9 months”. The bank has said the delay is necessary in order to complete a comprehensive review of each customer’s circumstances. It is anticipated that the other banks will also have a similar period of delay until the review process is completed.
The bank has not revealed what will happen in the interim period. It would appear that those customers who have been mis-sold an interest rate hedging product will need to continue making payments until the review has been completed. Some businesses are on the verge of collapse due to the hedge agreements and may not be able to survive for a further 9 months. In the circumstances, we think it is fair and reasonable that the bank should suspend interest rate hedging payments until the review is completed.
If the compensation offered by the bank is unacceptable or the customer falls outwith the review then court proceedings may be the last resort for the customer. The right to raise court proceedings in Scotland is lost five years after the date when the loss was suffered. Many of the agreements customers signed in 2007 onwards are at risk of being time-barred if we assume the loss was suffered when the agreement was signed. However specific legal advice should be taken by customers who think their claim may be time-barred as a solicitor may decide that you fall within one of the time-bar exceptions which would give you the right to claim despite the agreement having been signed more than 5 years ago.
The banks’ compensation review delay will leave many businesses with a dilemma. If they wait on the review decision and do not raise court proceedings then their potential legal claim against the banks could time-bar. Customers who were mis-sold hedging products should give serious consideration to raising court proceedings and then asking the court to freeze the case until the review decision has been made as otherwise they run the risk of losing their right to take court action.
If you require further information or would like to discuss a potential mis-selling claim, please contact the Banking Disputes Team on 0131 226 8200.