A LAWYER and business consultant have highlighted new developments relating to banks’ mis-selling interest rate hedging products to firms.

Michael Slater, of KBL Solicitors, and Dave Jones, of Professional Business Mentoring, gave the update after RBS and Lloyds groups set aside £700 million and £400 million respectively to meet potential claims.

This adds to the £850 million Barclays has already set aside — so the final bill paid by UK banks to businesses could reach £2 billion.

But Mr Slater and Mr Jones warn there is a Statue of Limitation in which firms can bring a claim.

Mr Slater said the typical period is six years because it is difficult to determine alleged events which took place more than six years ago.

Many products and swaps were mis-sold from 2006 to 2009, although the Financial Services Authority has indicated it might review claims as far back as 2001 and the banks are putting forward the time-barred “limitation” defence.

So products sold before 2007 will now be time-barred.

Mr Slater, head of litigation at KBL, which is one of the sponsors of the Bolton and Bury Business Awards, said: “While a section of the Limitation Act 1980 may provide a way around this, that will be of little comfort to potential claimants who may have to take legal action initially to determine whether they can bring a claim.

“This preliminary action is costly and an application which loses will result in substantial costs owed to the bank’s lawyers.

“While some commentators do not believe a bank will run a technical defence where it is found to be morally-lacking, nobody will ever find out what the bank did if the time-barred argument is run.

“Limitation, as a defence, stops many cases from being issued or pursued. Whether the banks want to use a technical defence is a matter for them and shareholders.”

However, Mr Slater also highlighted a further safety mechanism known as entering a “standstill agreement”, where banks are aware of limitation issues and may agree, under some circumstances, not to pursue limitation as an issue at a later stage.

He said these will be of serious concern to people who believe they were mis-sold a policy at any time approaching nearly six years ago.

Mr Slater added: “It will be interesting to see how all these issues are dealt with by courts, but there may be some very disappointed people who have already suffered significantly and are prevented from bringing a claim.

“I suggest they speak immediately with their solicitors about standstill agreements.”