The High Court has recently handed down the judgment in Parmar and another v Barclays Bank plc [2018] EWHC 1027 (Ch).
In a comprehensive judgment, Mr Hochhauser QC, sitting as a Deputy Judge of the Chancery Division dismissed claims for alleged breaches of statutory duty relating to two interest rate hedging products (IRHPs) entered into by the claimants in April 2009.
This is the latest in a long line of authorities in the swap mis-selling arena that have been decided in favour of the banks. The judgment is of particular interest as it is the first IRHP claim to reach a full trial involving a claim by a private person for alleged breaches of the FCA’s Conduct of Business sourcebook (COBS) rules under section 138D of the Financial Services and Markets Act 2000 (FSMA).
The judge found entirely for the defendant (Barclays), save for some minor technical breaches of COBS (in relation to which no loss flowed). In particular, the judge held that the sale was not advised (but that, even if it was, the IRHPs were suitable), that the IRHPs were appropriate and that, on the facts of the case, there was no obligation to disclose the existence of the CEE limit to the claimants. The judge also rejected Barclays’ reliance on previous authorities in terms of its ability to rely on its basis clauses.
The claim also raised allegations regarding an alleged failure by Barclays to disclose its internal calculation of the maximum credit risk that it faced in the event of a default by the claimants on the IRHP (referred to as CEE (credit equivalent exposure)). Similar allegations have been considered and dismissed by the Court of Appeal in Property Alliance Group Ltd v The Royal Bank of Scotland plc [2018] EWCA Civ 355.