GPs lose millions from mis-sold financial productsBMJ 2017; 359 doi: https://doi.org/10.1136/bmj.j5137 (Published 08 November 2017) Cite this as: BMJ 2017;359:j5137
- Gareth Iacobucci
- The BMJ
General practices have had to pay out millions of pounds after they bought interest rate hedging products mis-sold to them by banks, The BMJ has learnt.
In some cases the deals have left GPs struggling to retire or to sell their practices.
Interest rate hedging products, or “swaps,” are designed to help buyers manage fluctuations in interest rates with fixed rate deals. They were sold to small businesses seeking loans from 2001.
But in 2013 the Financial Conduct Authority found that there had been “serious failings” in the sale of these products and that 90% had been mis-sold.1
The BMJ has learnt of at least 10 medical centres hit by the scandal, with experts predicting that dozens or even hundreds may have been affected.
“Sold a pup”
One affected practice, the Ridge Medical Practice in Bradford, paid out an estimated £3.6m (€4m; $4.7m) to the Royal Bank of Scotland in interest between 2007 and 2015 after it took out a 26 year swap along with a £9.5m loan to fund new premises. The bank has refused to pay any compensation to the practice.
Nick Nurden, the Ridge practice’s business manager, who oversaw the deal in 2008, told The BMJ, “We were presented with what was effectively a fait accompli by the bank. They presented it to us as really the only option, but from what I now know there were far better products that would have been easily affordable and would’ve actually still done the same job of providing that security. …