Dozens of small property developers and investors are seeking legal advice over whether they can take action against high street banks for the alleged misselling of interest rate swaps.
Solicitors are reporting a wave of enquiries from developers and investors that are facing receivership as banks use swap contracts to crack down on loans made to smaller companies.
Collyer Bristow has received at least 10 enquiries from small property firms over the past fortnight; other solicitors are reporting similar numbers.
The firms believe that derivative contracts have been missold, having been told that they would act as insurance against potential interest rate rises.
Stephen Rosen, a partner at Collyer Bristow, said: “Many of our clients bought the products over the telephone.
“They were not warned that the swap contracts were often for a term that was longer than the loan itself, and that the banks penalised any party that wanted to get out of them with punitive exit fees.”
Rosen said that one of his clients, a property company with a £10m portfolio, would have to pay an exit fee of around £1.5m to be released from its swap contract.
