Cheshire, United Kingdom 21st April 2013 / PLS SolicitorsPLS Solicitors, one of the top law firms in the UK, offers services to small businesses embroiled in the SWAPs and Collars scandal.
PLS Solicitors, one of the leading commercial law firms in the UK, is offering its services to help small businesses untangle themselves from the mess that the interest rate hedging products (IRHPs) are causing them.
On Jan. 31, the Financial Services Authority (FSA) announced the launch of a compensation program amounting to more than £1.5 billion for small businesses that have been duped into taking out the SWAPs and Collars. Still, a hundred businesses out there are slowly being driven to bankruptcy for lack of knowledge about their rights.
The scope of the damage was substantial as the FSA estimates that at the very least, there are 40,000 IRHPs were offered to small businesses since 2001.
Robert Thomas, Director of Commercial & Residential Property, said even today small businesses are still blind to the implications of the IHRPs, which included SWAPs (which supposedly helps the entrepreneur fix their interest rate) and Collars (which supposedly aid them in capping the interest rates by controlling the fluctuations within affordable range). There are also structured Collars, which are a more complex versions of Collars.
But when the interest rates dropped significantly, the collectibles to small businesses have jacked up artificially. Estimates show that as much a 20% of the capital value of the loan represents the termination fee, which makes it very difficult for the customers to catch up.
"Small businesses were made to believe that these hedge products are meant to protect them. Ironically, the IHRPs that were created to protect them are now driving them to extinction," he said.
The issue came to a head when the FSA released a report which found that the banks were liable for not fully disclosing the termination fees, over hedging, bad practices and for failing to explain fully the nuances of the IHRPs to non-sophisticated customers.
Thomas said that the FSA defined "non-sophisticated customer" based on the provisions of the Companies Act of 2006. Under the law, if the customer fails to meet two of the following criteria: a turnover of more than £6.5 million, employing than 50 employees, or balance sheet valuation of £3.26 million then he is deemed to be non-sophisticated.
"We can work with small businesses to determine if they meet the non-sophisticated classification as outlined by the FSA," he said, adding that two scenarios are possible if it be proven the small business was duped into buying the hedge products:
"Either they could seek full redress, meaning they can get out of the product with a full refund of all their payments or be provided with an alternative product as well as a refund of some of the payments made," he said.
About PLS Solicitors
PLS Solicitors has been helping small businesses get out of the IHRPs offered by banks.
They can visit its headquarters in 2 Broomfield Lane, Hale, Altrincham, Cheshire.
Small businesses can contact # 0161 941 7449 for consultations and Email at: info@pls-solicitors.co.uk