The Royal Bank of Scotland (RBS) has paid out around £10 million to Westgate Healthcare for an alleged mis-selling of an interest rate swap.Westgate Healthcare (a care homes provider), which owns eight homes, wanted to expand its business so it took out a loan with RBS and was then charged high fees after the bank attached interest rate-hedging products.In 2008 the bank added 20-year swaps to loans totalling £18m.
By August 2014, the company had paid swap fees of about £6.5m to RBS and was locked in until 2028.Westgate sued RBS, claiming damages of over £30m. The bank recently settled the litigation out of court. It is understood to have paid roughly £10m to settle the claim but admitted no liability.
The complaint took three years to reach settlement, and the bank would not admit liability. “It has been a long and expensive fight to put things right, as RBS … has never admitted any fault,” said Richard Langley from Bircham Dyson Bell who represented Westgate Healthcare.
With revenues of around £15 million, Westgate Healthcare was seen as sophisticated and therefore not eligible for the compensation scheme set up by the Financial Conduct Authority (FCA) in 2012. The FCA reviewed products sold by 9 banks to 30,000 firms, however 10,000 were excluded due to being sophisticated.This is not the only legal case against RBS concerning the mis-selling of interest rate swaps. It has been said that it is facing over 40 cases of a similar nature, however the bank has declined to comment.
Push Patel, who is the CEO of the Westgate Healthcare, was not available to make any comments.
