Banks are refusing to call a halt to costly monthly payments arising from interest rate swaps even where they know the product was mis-sold, a leading commercial law firm has claimed.
David Greene, a senior partner with London-based Edwin Coe, told the BBC radio's Today programme that the banks were not only stalling on compensation, but also continuing to demand payment from customers, even when they knew that an interest hedging product had been mis-sold.
"The FSA has made its findings, the banks accept that they unlawfully mis-sold these things to these people, and yet they are still exacting these charges, which are very substantial and - for many in these difficult economic times - hard to afford," he said.
"There's no conversation - people are approaching the banks and saying, 'can we suspend the charges while the enquiry into compensation is going on' and the banks are refusing - they're saying that there's an obligation to pay and so you have to pay."
The British Bankers' Association has warned that - due to the fact that only a minority of the 28,000 interest hedging products held by small businesses are thought to have been mis-sold - a blanket freeze on interest rate swap payments would leave many facing large back-dated charges when the swap resumed.
However, Greene argued: "That's not the core of the problem; the core of the problem is the banks refusing to accept payment should be suspended when they are approached.
"If a client says 'you mis-sold me this product', the bank is very easily able to say 'yes or no' to that - but they're saying: no - you've got to keep paying the charges while we sort out the compensation."
If you think you have been mis-sold an interest hedging product, PrintWeek would like to hear your story. Please contact news editor Simon Nias on 020 8267 4502 or email email@example.com
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