Mis-Sold Fixed Rate Business Loan
Fixed Rate Business Loans were sold to business owners in the UK despite being an unregulated product. The associated risks of taking out such a loan were not fully explained to the business owners by the bank or building society, thus leading to the mis-selling of the loan. If the business owner is not fully aware of the possible financial risks of taking out such a loan, then they are unable to assess whether the loan is the right product for them.
Customers were also not made fully aware of the financial impact that a Fixed Rate Business Loan would have on their business when interest rates fell, which left a significant amount of customers in financial difficulty. If a customer wanted to cancel the loan, they would have to pay a high exit fee which was sometimes as high as 40% of the original loan value.
Banks and building societies mis-sold Fixed Rate Business Loans by failing to make customers fully aware of all of the risks associated with the loan. They also failed to fully inform customer of the high exit fees that applied to this particular loan as well as failing to prevent over-hedging. Sales advisors who sold the loans to customers in branch did not receive sufficient training to provide customers with the relevant risks and fees and were encouraged to sell more loans by incentive and reward schemes.
If the above sounds familiar and you would like legal advice in regards to a claim in relation to mis-sold FRBLs please call our experienced legal team today on 0800 083 0266 or Start Your Claim Now.
I’ve Been Mis-Sold a Fixed Rate Business Loan
Both private clients and micro-enterprises are able to take a claim regarding a mis-sold Fixed Rate Business Loan to the Financial Ombudsman Service. A micro-enterprise is defined as a business that has less than 10 employees and an annual turnover of less than £2 million at the time of the complaint.
One of the key things our legal team will look out for with a Fixed Rate Business Loan is whether the break or termination costs of these products were explained to you by your bank either during the pre-sakes process or at the point of sale. FRBLs were largely modelled on Fixed Rate Mortgages, except unlike a mortgage which typically has a 2-3% termination cost, FRBLs attracted a much larger termination cost, some as high as 40% of the loan value.
If you would like more information and advice in regards to a micro-enterprise Fixed Rate Business Loan claim please feel free to contact our experienced legal team who will be more than happy to help you, 0800 083 0286 or Start Your Claim Now.
FAQS Fixed Rate Business Loan
Q: What is a Fixed Rate Business Loan?
A Fixed Rate Business Loan is a commercial loan offered by many high street banks such as Lloyds, NatWest, Halifax, Bank of Scotland and HSBC. Fixed Rate Business Loans were typically structured in a way to provide protection for the business from increases in interest rates by fixing the rate of interest payable on the loan for a certain period of time. However, Fixed Rate Business Loan agreements also contained hidden ‘derivatives’ that made the commercial loan much more of a complex undertaking which many businesses did not understand. This feature and risk was not always properly explained by the bank and caused businesses large sums of money.
Q: How can I tell if I have a FRBL?
If your business took out a business loan from banks such as Royal Bank of Scotland, Lloyds Bank, HSBC, Barclays, Santander, Clydesdale Bank, Yorkshire Bank, Halifax, Bank of Scotland, Nationwide or West Bromwich between 2001 and 2013, then you may have been provided with a Fixed Rate Business Loan. To check, look at the loan documentation. It should clearly state “Fixed Rate Loan” on the front page of the Facility Agreement. If in doubt, get in touch and we will check for you.
Q: How many FRLs were sold by banks?
It is estimated that have been 60,000* Fixed Rate Business Loans sold by the banks since 2001. Other names for Fixed Rate Business Loans include Tailored Business Loans, Treasury Loans and Sterling Fixed Rate Loans.
Q: How can I find out more about the problem of FRLs?
There are a number of ways to find out more about Fixed Rate Business Loans. Feel free to contact us for advice on 0800 083 0266. You can also find further information on the Professional Financial Claims Association website.
Q: Can I claim even if my Fixed Rate Business Loan has expired?
Yes. It is still possible to claim for the mis-selling of the Fixed Rate Business Loan even if the product has expired. If your claim is successful, you will receive financial redress.