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Libor loans & complaints
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# 1
jamie11
Old 02-12-2012, 7:30 PM
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Default Libor loans & complaints

I have recently become aware that loans linked to the libor rate may have been unfairly sold and there is a chance of compensation from the banks, would it be possible to have a section devoted to this please so that those of us that have been unfairly treated can swap notes.
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# 2
JuicyJesus
Old 02-12-2012, 7:39 PM
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It's not really unfair treatment. You signed up for a loan that tracks LIBOR, end of.

Also, in many cases LIBOR was depressed artificially. This means that those with LIBOR loans would actually have benefited financially from the manipulation. Following standard redress rules, you may well either break even or actually owe more money to the bank.
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# 3
Wutang
Old 02-12-2012, 7:47 PM
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Quote:
Originally Posted by jamie11 View Post
I have recently become aware that loans linked to the libor rate may have been unfairly sold and there is a chance of compensation from the banks, would it be possible to have a section devoted to this please so that those of us that have been unfairly treated can swap notes.
Your signature is so sexist I also now crave some unobtainable desperate compo too!!
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# 4
broad-sword
Old 02-12-2012, 10:09 PM
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LIBOR may have been manipulated but it was not unfairly sold. You took out a mortgage/loan, having no doubt thoroughly researched the best deal. For every post that gets my sympathy on this forum there are 10 that do not. On the positive side, there's probably a loose paving stone somewhere on the way to work tomorrow...
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# 5
~Brock~
Old 03-12-2012, 9:46 AM
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Originally Posted by broad-sword View Post
On the positive side, there's probably a loose paving stone somewhere on the way to work tomorrow...
....and if not then take a detour through the park and walk under as many trees as possible, especially if it's windy at the time...you never know you might get lucky!
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# 6
jamie11
Old 03-12-2012, 4:25 PM
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OK, it seems none of you know what I'm talking about. Instead of libor call it a 'swap loan'. Watch the news for mention of them because they are going to be big news soon just as the PPI scandal was and is.
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# 7
antrobus
Old 03-12-2012, 4:49 PM
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Quote:
Originally Posted by jamie11 View Post
OK, it seems none of you know what I'm talking about. Instead of libor call it a 'swap loan'. Watch the news for mention of them because they are going to be big news soon just as the PPI scandal was and is.
I'd strongly suggest that it is you that doesn't know the difference between a libor linked loan and an interest rate swap. In your OP you referred to "loans linked to the libor rate" so of course no one else has the faintest idea that you meant something else entirely different.

P.S. What is thread doing in 'Site Feedback'??
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# 8
robrooo
Old 03-12-2012, 11:15 PM
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Didn't this story break in the Summer? Basically small to medium-sized businesses who wanted a loan from their bank were told they had also to take out a hedging swap (sometimes with a cap or collar) to protect themselves from interest rate changes.

Generally this type of instrument has a fixed interest leg and a variable leg, linked to LIBOR. The LIBOR flows cancel out the variable loan rate and leave you with a fixed rate loan. The cap and collar adds trigger rates at which the hedge rate comes into force.

But of course you pay a premium for the privilege of buying the swap/cap/collar, and maybe the rate that you "bought" was not as good as the natural rate you might have got with no hedge, especially as interest rates have been very low for some time.

There were also allegations that the hedge amount was often inflated compared to the loan; that clauses in the swap agreement allowed the bank to cancel the hedge at any time, but not the borrower; that the period of hedging was longer than the lifetime of the loan; thus the allegations of mis-selling.

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P.S. What is thread doing in 'Site Feedback'??
Indeed!
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# 9
_Andy_
Old 04-12-2012, 2:09 AM
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Quote:
Originally Posted by jamie11 View Post
OK, it seems none of you know what I'm talking about. Instead of libor call it a 'swap loan'. Watch the news for mention of them because they are going to be big news soon just as the PPI scandal was and is.
So, given that you're clearly the authority on the matter, why are you bothering posting here?
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# 10
Wywth
Old 04-12-2012, 11:35 AM
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Quote:
Originally Posted by antrobus View Post
P.S. What is thread doing in 'Site Feedback'??
Quote:
Originally Posted by robrooo View Post
Quote:
Originally Posted by antrobus View Post
P.S. What is thread doing in 'Site Feedback'??
Indeed!
Where would you two suggest the OP posts a thread requesting a new board?
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# 11
antrobus
Old 04-12-2012, 4:46 PM
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Quote:
Originally Posted by Wywth View Post
Where would you two suggest the OP posts a thread requesting a new board?
So you think when OP is referring to the possibility of having "a section" devoted to "loans linked to the libor rate" they're requesting a new board?

Got to be a candidate for the most misleading post of the year award.
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# 12
jamie11
Old 05-12-2012, 3:06 PM
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Quote:
Originally Posted by _Andy_ View Post
So, given that you're clearly the authority on the matter, why are you bothering posting here?
That's just it, I am not an expert or an authority. That's why I'm asking.

Quote:
Originally Posted by robrooo View Post
Didn't this story break in the Summer? Basically small to medium-sized businesses who wanted a loan from their bank were told they had also to take out a hedging swap (sometimes with a cap or collar) to protect themselves from interest rate changes.

Generally this type of instrument has a fixed interest leg and a variable leg, linked to LIBOR. The LIBOR flows cancel out the variable loan rate and leave you with a fixed rate loan. The cap and collar adds trigger rates at which the hedge rate comes into force.

But of course you pay a premium for the privilege of buying the swap/cap/collar, and maybe the rate that you "bought" was not as good as the natural rate you might have got with no hedge, especially as interest rates have been very low for some time.

There were also allegations that the hedge amount was often inflated compared to the loan; that clauses in the swap agreement allowed the bank to cancel the hedge at any time, but not the borrower; that the period of hedging was longer than the lifetime of the loan; thus the allegations of mis-selling.
That sums it up to a certain extent.

The deal I was given, I was quite happy with...until I asked for a figure to pay it off, I knew about the early repayment charge of 1% I had no problem with that but there were also some administration charges etc written into the contract, no figures, just a clause. When the figures were sent to me I found they wanted £30K more on top of their repayment.

Not really understanding this I set about raising it, well eventually I did raise it, the full outstanding amount and enough to pay those charges, so I asked for the figures again, this time when they sent them they were demanding an extra £60K on top of the repayment figure, since I hadn't arranged for that much I had to drop it and stay with them. That cost me a lot of money. They said it was to do with the LIBOR

Please don't think I'm whining here, I have no trouble servicing this loan, it has however served it's purpose and I want to get rid of it. The banks have been caught out again, the FO is finding for people in my position and ordering them to compensate for the losses they have made caused.

That's why I posted this thread, if you understand the question then please contribute, if you don't understand it then feel free to post but don't make comments about what is a very serious matter for me personally.

Last edited by jamie11; 05-12-2012 at 3:13 PM.
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# 13
dunstonh
Old 12-12-2012, 11:17 AM
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With the libor issue, if anything, consumers benefited as the rate was depressed. However, busineses could have suffered.

http://www.ftadviser.com/2012/07/03/...N/article.html

Quote:
the FO is finding for people in my position and ordering them to compensate for the losses they have made caused.
Can you give a link for a published case that has done this as I havent seen anything in the FOS publications yet to suggest they are. I suspect they are not doing that because until the LIBOR issue is investigated and the FSA publish their findings and instructs the lenders one what to do, the FOS will withhold any decisions until then. The issue of whether any UK retail borrowers were affected is still unknown. To suggest that the FOS have ruled on cases on a subject this complicated after such a short a period and whilst investigations are still going on and prosecutions undecided is pushing it.

http://www.ft.com/cms/s/0/2d345e04-c...#axzz2EjkmWecb
I am a Financial Adviser. Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.

Last edited by dunstonh; 12-12-2012 at 11:23 AM.
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