Court rejects Barclays move to delay Libor test case

Barclays is facing its first court battle over Libor-rigging allegations after losing an attempt to have a case delayed over claims it mis-sold an interest rate hedge to a business customer.
Judge Simon Brown QC yesterday rejected Barclays’ move to have a mis-selling claim brought by care home operator Guardian Care Homes pushed back and ordered the bank to file a defence by the end of next week reports The Telegraph.

Mr Brown said Barclays request to have the case delayed until Guardian’s claim had been investigated as part of an Financial Services Authority compensation scheme was an “impossible argument”.

“We just do not know if the scheme [the FSA compensation process] will include the claimants, or even know who is a skilled person. Some cases need to be litigated and I have a duty decide which,” said Mr Brown.

The Guardian claim, which is being heard at Birmingham Mercantile Court, is seen as an important test case for the thousands of businesses that are thought to have potentially been mis-sold complex interest rate derivatives by banks, including HSBC, Lloyds and Royal Bank of Scotland, as well as Barclays.

The case is also seen as important as it contains specific allegations that Barclays’ attempts to manipulate Libor cost it thousands of pounds in extra payments.

“Today was a cynical attempt by Barclays to avoid responding to the allegations they face both with swap mis-selling, but also Libor. To say that the FSA redress scheme is in a position to provide us with fair justice is laughable and I am delighted the court has recognised that,” said Gary Hartland, chief executive of Guardian Care Homes.

A spokesman for Barclays said: “At the current time it is unclear whether Guardian Care would be within the parameters of the FSA review. As a result, whilst the bank has a claim against Guardian Care Homes which is of greater value than their claim against us and normally these claims would be run together, because of the FSA agreement we are unable to do this. Therefore we were seeking to pause these proceedings whilst Guardian Care’s eligibility is determined so that the claims could run in tandem if Guardian Care were not eligible. Therefore a pause in proceedings would have saved the court’s time”.