Barclays Bank faces a landmark court case this week brought by a customer who claims the bank “took advantage” of him to mis-sell complex derivatives products.
Lawyers representing husband and wife Ramesh and Rana Parmar will argue Barclays sold them complex interest rate swaps which they were not able to understand.
The case is believed to be the first of its kind brought by a private individual, rather than a group or firm, to make it all the way to trial, rather than being settled out of court beforehand.
Deputy High Court judge Andrew Hochhauser QC will hear more than four days of arguments, starting on Tuesday, centred on the bank’s explanation of the risks around the two interest rate hedging products. Those interest rate swaps are used to protect against movements in interest rates set by central banks.
Claimant Ramesh Parmar, who runs a business in Perivale that sells disposable gloves, said that: “They sold me complex products I didn’t understand, I couldn’t understand.”
The Parmars allege they were told the products could expose them to losses of £77,000, but claim Barclays had already calculated the real potential future exposure on breakage to be as much as £300,000.
The bank is alleged to have then used around £300,000 of the Parmars’ credit limit to protect itself against breakage costs, while failing to notify the couple of “the potential magnitude of breakage costs involved in the swaps or of the utilisation of their credit limit”.
The case is also unusual in that legal costs are likely to far outweigh any award. The Parmars are claiming damages of up to £500,000.
M. Ali Akram, a Lexlaw partner representing the couple, acknowledged they were taking a “significant cost risk”. He said: “The reason the customers continue to fight this litigation is the family refuse to be bullied by this bank and wish to set a precedent to help other small businesses.”
Lexlaw, a firm of solicitors and barristers in Middle Temple, claims to have carried out more successful claims against UK banks than any of its peers.
David Berkley QC, of 3 Paper Buildings, is acting for the Parmars, instructed by Akram and Sivakumaran Sivathillainathan of Lexlaw Solicitors and Barristers.
Barclays will be represented by Andrew Sutcliffe QC, of 3 Verulam Buildings, and James Duffy and Edward Levey of Fountain Court Chambers, instructed by Clare Stothard and Karen Furniss of Dentons.
Barclays declined to comment.
