On December 21, 2012, the High Court decided an alleged mis-selling of interest rate swaps case in favour of the defendant, RBS. The claimants alleged that the interest rate swap sold to them by RBS in May 2005 as a form of insurance against their existing liabilities of £1.5 million had been mis-sold, on account of the fact that they “fared very badly under the swap” after interest rates fell from October 2008. The claimants argued that RBS was in breach of its common law duty of care and that, had it not been for these breaches of duty, they would never had entered into the swap.
In his judgment Judge Wakeman QC found that “Because of the credit crunch, the ensuing parlous position of RBS, and the taking of the wholly unforeseeable step of increasing margin significantly, it transpired that the protection given by the swap was not complete . . . But none of that means that the swap was an unsuitable product back in May 2005.” However he added that “this is a highly fact-sensitive case” that turned on what was said in meetings between the claimants and the defendant prior to the claimants entering into the swap.