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Mis-selling of interest rate swaps:  Green v. Royal Bank of Scotland PLC [2013] EWCA Civ 1197

The Royal Bank of Scotland entered loan agreements with the claimants with a fixed interest rate of 1.75% over Base Rate.   RBS recommended an interest rate ‘swap’ where the claimants were protected from an interest rate rise but would also not benefit from a drop in interest rates. After an unprecedented drop the claimants alleged that the Swap was mis-sold and that the bank owed a co-extensive duty of care in tort; in essence that the FSA’s Conduct of Business Rules (COB) were incorporated into RBS’ advisory duty.   The claim failed at first instance and the claimants appealed.

The Court of Appeal rejected the appeal on the basis that the bank owed a duty of care in making statements that they knew or ought to have known would be relied upon, but that duty did not extend to being ‘informed by’ the provisions of the COB.   In short the Court of Appeal found that a claimant did not have the same entitlement under common law than they would have under statute (the FSMA 2000 regime). The claimants were time-barred from pursuing their claim under statute and this worked significantly to their detriment.

For the judgment, click here.

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Date: 09/10/2013

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