An important decision has been released by the Financial Ombudsman Service (FOS) relating to a swap entered into by Messrs Green & Rowley after the 2005 swap which has been the subject of a long running litigated battle with RBS, culminating in the Court of Appeal’s decision in October 2013.
Some 3 years after entering into their initial swap with RBS, Messrs Green & Rowley entered into a further swap, this time in partnership with a Mr and Mrs Wigglesworth, in conjunction with further borrowing from RBS. Almost identical allegations have been made against RBS in respect of the sale of this swap as were made in Messrs Green & Rowley’s litigated case. In short, it is alleged that the partners were recommended to take a 10 year swap by their trusted relationship manager, that they were ill-informed about a number of vitally important risks of the product including the potential magnitude of the break costs, that the sales process was rushed with the swap being entered into only a day after the meeting held to discuss it and that the swap was unsuitable for the future plans of the partners, as the partnership was only intended to be in place for around 3 years.
Specifically having taken into account the Court of Appeal decision in Messrs Green & Rowley’s litigated case, the FOS adjudication decision commented that “the jurisdiction of this service differs from that of the courts generally and there is more for me to take into account than the narrow points of law considered by the Court of Appeal in Green & Rowley”. Taking into account the law, the statutory regulations in place at the relevant time (COBS rules) and what was considered to be acceptable industry practice at the relevant time, the FOS adjudication decision came to the conclusion that this 2008 swap had been mis-sold.
The decision centred upon the lack of information provided about break costs, and in particular it was noted: “I consider that the swap was mis-sold, because RBS had not provided sufficiently clear information about break costs, generally, but especially to Mr Green & Mr Rowley”.
The FOS decision recommends replacement of the original 10 year swap with a 3 year swap, which would have expired in 2011. The parties now have until 6 January 2014 to decide whether they accept this decision or require the case to be referred to an Ombudsman.
Claire Collinson of Claire Collinson Legal represents Messrs Green & Rowley & Wigglesworth in relation to this FOS complaint and comments that this decision marks a significant demonstration of the divergence between the way in which the courts on the one hand, and other dispute resolution forums such as the FOS, on the other hand, are prepared to consider similar cases, and therefore the significant benefits that the FOS can offer to claimants.
