RBS secures court victory in rate swaps case

Royal Bank of Scotland (RBS) has won what is believed to be the first High Court case relating to alleged mis-selling of interest rate swaps, according to reports.

High Court judge David Wacksman dismissed hotelier Paul Rowley and business partner John Green’s claim against the bank, which alleged RBS mis-sold them an interest rate swap in May 2005 as a form of insurance against their existing loan liabilities.

According to the ruling, the swap performed well until the financial crisis in October 2008. When the pair asked in 2009 about the costs of terminating it, they learned it could cost as much as £138, 650.

Wacksman said: ‘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.’