The Royal Bank of Scotland (RBS) has won an appeal against business partners Paul Rowley and John Green who alleged they had been mis-sold interest rate swaps.
In December the High Court dismissed the claim by Rowley and Green who had alleged that RBS mis-sold them an interest rate swap in May 2005 as a form of insurance against their loan liabilities.
In appealing the case, the businessmen suggested that the bank owed a common law duty of care based on the regulator's Conduct of Business rules.
Earlier this week the Court of Appeal dismissed their appeal.
Judge Stephen Miles Tomlinson said that there was no evidence that the bank was not carrying out its statutory duty. The judge also commented on how Rowley and Green tried to go beyond the ‘narrow’ argument on the appeal.
He said: ‘I would dismiss this appeal. The Financial Conduct Authority was given leave to intervene in the appeal in order to make submissions upon the issue which does not in the event arise, whether the judge was right to conclude that the bank did not in any event contravene [COB rules]…it is inappropriate to express any view on a conclusion which was also unnecessary to the judge’s decision.’
The two men in this case had two loans from RBS secured on their properties. The pair said that in May 2005, they were advised by two bank executives that the swap would protect them against the risk of future interest rate rises for the duration of their loans.
However, the two men alleged that they fared badly when interest rates fell to an all-time low in 2008 and were 'shocked' in 2009 when they learned of the costs of terminating the swap early.
Juliet Schalker, a partner at London-based law firm Rosling King said the ruling was a victory for banks and may be used as a precedent in mis-selling claims against lenders.
The Court of Appeal is set to rule two cases in relation to Libor manipulation next week that if lost could lead to more claims.
In one case, Graiseley Properties v Barclays Bank, the claimants have alleged the bank sold Libor-related products when it knew that its employees were attempting to manipulate the rates.