Chef and hotelier Paul Rowley loses appeal on interest rate swap case

Rowley, who runs the restaurant and catering​ at the Blackpool Football Club hotel and business partner Green, took RBS to court in December last year after they alleged they had been mis-sold an interest rate swap in 2005 because the bank failed to inform them of the additional costs attached to the swap. 

Costs have so far run to £400k against a £990k loan to buy residential properties with the pair joining an estimated 8,000 hospitality businesses​ who have found rates rocket as a result of swapping deals. 

Rowley and Green took their case to the Court of Appeal on Monday to try and overturn the judge's decision to dismiss the case because he ruled that the bank had provided the pair with information rather than advising them. 

Appeal​

Rowley and Green's solicitor Jon Green of Clarke Willmott LLP, appealed on the basis that the Financial Services Authority's Conduct of Business Rules (COBS) demanded that banks have a 'common law duty of care' to customers when advising them. 

However, the court upheld the judge's decision that the pair had not been advised, merely provided with information. A second part of the appeal, which looked at the extent of the risk warning required under the COBS Rules of the breakage costs of the swap if they sounded in a duty of care, was not looked at because the first part had been dismissed. 

A written judgement will now be issued in the autumn.  

Green said his claimants were disappointed with the outcome of the appeal.

“Albeit we were not instructed at first instance, we were surprised by the finding in the initial judgment that no advice was provided. In our experience, it is very unusual for complex financial products to be sold without advice," he said. 

“We are very disappointed by the outcome. That said, it is as a result of the specific facts of this case and of limited wider application. The FCA has given a clear steer of the standard of explanation that would be required on the breakage costs under the COBS Rules and we would expect that to be upheld in an advice situation.

"We will await the Court of Appeal’s written judgment in the autumn on the extent in an information only situation to which the COBS Rules sound in a common law duty of care. We would hope and expect that any COBS Rules which governed information situations would be applied by any financial adviser exercising a reasonable standard of care.”

Rowley and Green join thousands of small businesses who have seen rates rocket after taking part in interest rate swaps.