QA Legal a unique association of lawyers, financial and banking specialists announced it has now launched its website www.qalegal.co.uk and is to open its lines to clients next week. Formed to address the lack of affordable, accessible and intelligible advice for clients caught up in the burgeoning scandal of mis-sold swap deals, QA is made up of solicitors, barristers, advocates, financial and banking specialists all of whom are experienced in the field of derivative trading and in litigation surrounding the sale of swap deals to unsuspecting clients of High Street Banks. Its members come from the legal, banking and financial professions across the UK and from Germany with others planning to join from other countries in Europe.
Speaking about the launch of QA Legal, Gordon Deane of Balfour+Manson LLP Solicitors of Edinburgh one of the originating members said:
“In recent years there has been an enormous growth in the sale of derivative products such as interest rate swaps to small, medium and large businesses, usually by the very Bank that the business uses for its day to day operations. These products are highly complex financial instruments even in their simplest form. They were sold by bonus driven salespeople with little or no regard to the needs of the businesses targeted. Buyers were told that these products were necessary to protect them from rising interest rates, many at the very time that rates were falling. In fact they were more likely designed to protect the Banks that sold the products from the effect of falling rates and poor strategic decisions over the preceding years.”
As the recent articles in the Telegraph (Sunday and Daily) have shown buyers of these products were given little or no information about their operation or real costs with sales people often doing little more than paying scant regard to the rules set out by the banking regulator, the Financial Services Authority that governed how these products were sold, and to whom.  At hastily convened and brief meetings, people were induced to commit to paying their Banks huge sums of money unnecessarily and often to the destruction of their businesses. In many cases, the Bank insisted that its client took out a hedge. “Many of these products were bets on the movement of interest rates where the customer was gambling against the Bank’s vast knowledge and research as to the movement of these very rates; if the Bank won the bet the customer lost” said QA member Professor Julian Roberts a partner in Munich based Wolfsteiner-Roberts and an English barrister who has successfully taken several high profile cases on mis-selling through the German Courts. “Not surprisingly very few clients won the bet”.
“Many clients were forced to enter these agreements under threat of loans or overdraft facilities being withdrawn” said solicitor Jared Duffy of DFG in Yorkshire another member. “Clients were presented with highly complex documents and schedules of products such as amortizing swaps without any notice and told that if they did not sign there and then they would lose their existing loans, or would not be entitled to new loans which would promote expansion of their business. Had the Bank wanted to protect their clients against interest rate movements they could have given them fixed rate loans but that would not have given the salespeople or the Bank the huge rewards they got from selling these hedging deals. It was cynical and predatory with the Banks exploiting the trust that had built up in customers over many years.”
Another member of QA Legal with over thirty years of experience in banking said “To ordinary retail bankers like me and my colleagues it was an utter disgrace and profoundly unethical not to say dishonest. Many of the people selling these things had little or no training in any aspect of banking and none in professional ethics. They were simply out to make money for themselves and could not have cared less about the client despite the pretence. Retail bankers profited in terms of earning ‘soft-sales credits’ for selling these products, which fed through to their year end bonuses. Many have left banking as a result of the subversion of standards that had formed the backbone of their working lives. In the end they have done irreparable harm to many businesses and to peoples’ lives not to mention the harm done to the Banks themselves which we are only now beginning to realize.”
“Derivative products can be highly complex” said another member of QA with over twenty five years experience of these products. “It would be next to impossible for an ordinary client with no experience of these products to understand the implications of a trade sold as a form of defence against rising rates by a Bank that the client implicitly trusted. These products do have their uses if structured well, and for large sophisticated corporates, but they have no application for small business owners. To make matters worse, the banks seemed intent upon selling the more sophisticated products, such as multi-callable structured collars. Gracechurch Advisory was set up to examine these structures, and to look at the valuations of the hedges.”  Iain Mitchell QC, a Scottish Advocate who is a leading member of the group says that a group like this is essential. “Each case is different and has to be examined individually by people with experience and knowledge. When I first started looking at these deals I could hardly get my head round the language and the complex structures which are simply designed to obfuscate the true nature of what is actually being sold. This is not a situation like PPI and cases cannot be treated in that way. Clients need a much higher level of skill and expertise to understand what has happened and to challenge the Banks that have sold these products over recent years. QA Legal is here to provide exactly that expertise.”
The group will operate across Europe though it is starting up in the United Kingdom and Germany. “There is already considerable interest in other jurisdictions” said Colm O’Liatháin, barrister and mediator, a founding member and the group’s interim administrator along with Nick Miller from Butterworths Solicitors in Cumbria. “A lot of deals were done under English Law through the City of London even though the counterparty was resident say in Ireland or Belgium. This alone has created obstacles for people trying to seek recompense having to come to grips with alien jurisdictions with differing interpretations of European directives. QA will provide a focus for clients and using the internet effectively we can provide a rapid and tailored service across Europe. These products are governed by European regulations which Banks have largely ignored. Regulatory authorities have allowed this to happen and appear to have been caught unawares by the scale of this problem. Banks have relied upon the complexity of these regulations, their relative obscurity and lax oversight believing that their customers will not have the resources to challenge them. QA is designed to address that imbalance and will work with a range of other bodies and experts to ensure that those affected have access to proper legal and financial experts. QA also has the personnel to help clients deal with their banks even when taking the same bank to court.”
QA Legal has developed a relationship with established insurance brokers to provide access to sources of funding for litigation against the Banks where appropriate. Many clients are alarmed by the possible costs of litigation as they are by unsettling their existing relationship with their Banks upon which their survival depends. QA will provide expert advice on maintaining existing relationship with Banks and access to insolvency practitioners where companies or individuals are threatened with insolvency proceedings by the Banks that sold them the swap deals which have gone so dramatically wrong.
“Putting these elements together has taken a great deal of time” says a member. “A year ago there were only a handful of people in the UK who could even hold a conversation on these products. Publicity has meant that many firms are now springing up, particularly from a PPI background, claiming to have expertise in derivatives, carrying a risk that lack of experience could prejudice a legal claim.  QA Legal has been set up  to ensure that the advice and support given is of a thoroughly professional and realistic nature and does not further mislead people whose lives and business have been damaged already by misleading claims and half truths.”
For further information on QA Legal, please contact Gordon Deane on 0131 200 1485.