William Fox Bregman
Partner, Solicitor & Head of Banking and Finance Litigation
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Date Published:28 Jul 2016 Last Updated:23 Jul 2021

Not Happy with your IRHP Redress? Make a Libor Claim

Banking & Finance Litigation

Background

On 29 June 2012 one of the largest UK Banks was fined £290m by the Financial regulator, the FSA (now FCA), for attempting to manipulate the Libor Rate. The FSA launched an independent investigation into the conduct of many of the largest UK Banks regarding Libor manipulation.

What is LIBOR and why is it important?

Libor is the London Interbank Offered Rate which is an average of the interest rates which each of the 16 largest London Banks estimate that it would be charged to borrow from other banks. A high proportion of financial contracts and loans are agreed in reliance upon this rate and the British Banker’s Association (BBA) has estimated that £225trn worth of swap contracts (IRHPs) are formed in reliance of it.

Recent Developments

Given the fact that such a high volume of loans are agreed on a Libor rate basis, it is essential that the rate is accurate and transparent. As a result of the FCA enquiry into Libor manipulation, numerous High Street Banks have been investigated. UBS was fined a total of £950m by Swiss, US and UK regulators in December 2012 for Libor manipulation and Lloyds was fined £105m in 2014 for its conduct in relation to the same. RBS, Deutche Bank and JP Morgan have also received substantial fines following the FCA investigation.

More recently, individuals from a range of banks have been convicted for fraud offences relating to Libor rate fixing. As the seriousness of the scandal is uncovered, an increasing number of Libor claims are being made and the Banks have become more willing, in certain circumstances, to reach settlement. Perhaps this is to avoid disclosure of damaging evidence as to their potential involvement in the scandal.

After Graiseley Properties issued a claim against its Bank for the mis-sale of an IRHP along with a claim for the manipulation of Libor, the Court of Appeal ruled that the Libor fixing claim was a triable issue. Thereafter, the Bank reached a settlement, reportedly worth some £40m, with Graiseley shortly before trial was due to commence. It is widely believed this was in an attempt to avoid further negative publicity for Libor rigging or to open the floodgates to further Libor claims.

At a pre-trial hearing in PAG v RBS, the High Court found against RBS and ordered that they provide inspection of documents relating to Libor manipulation as they were considered to be relevant to the mis-sale of an IRHP. These recent judgments provide encouragement for customers making a claim against the Banks for the mis-sale of an IRHP where a trade was based on Libor.

How we can assist you or your company

Many investors, borrowers and businesses may have been effected by Libor manipulation. This may be the case if the rate was artificially high or low at the time of the agreement. It might be that the Libor trade is not enforceable or may give rise to the right to substantial damages. We can advise you as to whether this may be the case.

Customers who were mis-sold an IRHP and pursued redress through the FCA Review but did not receive the redress that they sought, may also have grounds to challenge the conduct of their bank if they entered into a Libor product. Some customers may have suffered excessive charges or costs as a result of having their loans restructured to or from Libor based agreements.

If you feel that you have been let down by your bank or did not get the redress you deserved, contact William Fox Bregman, the partner of our Banking and Finance Litigation Department, at william.foxbregman@ellisjones.co.uk or on 01202 525333. We have handled over 150 complaints and recovered over £38m for our clients as a result of financial mis-selling and therefore have extensive experience in dealing with swap products, fixed rate loans and other derivatives of which the Libor rate is a key element.