Barclays Battles Care Home In Mis-Selling Case

Barclays is facing a landmark test case at the High Court over claims it mis-sold complex financial products to a care home operator.

It is being brought by Guardian Care Homes (GCH), which says it should never have been sold two interest rate swap arrangements worth £70m when it sought to refinance loans with Barclays.

The company also claims it should be compensated as the products were based on Libor - the key interbank lending rate that was found to have been manipulated by Barclays staff.

GCH, which is based in Wolverhampton and runs 27 homes, said: "It is simply wrong that with one hand a bank is aggressively selling a highly complex financial product designed to protect someone against an interest rate rise, while the other hand is manipulating the rate for its own benefit."

Interest rate swaps are designed to insure businesses against rising interest rates.

Barclays, which agreed in June to pay £290m in fines to UK and US regulators to settle allegations that it manipulated Libor, has set aside £450m to compensate customers mis-sold interest rate swaps.

The bank is expected to argue at the High Court that GCH was sophisticated enough to understand the terms of the agreement.

The preliminary hearing will involve submissions by both sides before a judge determines what should happen next.

The dispute - the first of its kind to come to the High Court - will be watched closely by businesses which believe they were mis-sold a rate-swap product while other banks - many of them facing Libor probes - will hope the case eases pressure on the industry.

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