A couple who were mis-sold an interest-rate swap arrangement have received £350,000 compensation.
The couple, Mr and Mrs Flett, signed up to the arrangement, which is a specialist insurance policy, six years ago. The idea is that the policy would offset any rise in their mortgage rate.
The bank, however, failed to advise them that should interest rates fall they would have to repay thousands of pounds every month.
The couple own the Hotel Piccadilly in Bournemouth. To buy the hotel they borrowed £1.75m from the bank, which cannot be named for legal reasons. At that time, the bank persuaded them to purchase the interest-swap arrangement.
Mrs Flett said: “It was a disaster – the more the rate went down, the more we paid.
“We were paying about £6,500 a month which was a huge amount of money to us, on a new business.
“Nobody told us that it would cost so much.
“If I’d have known that our business, our home, our marriage was at risk, I just wouldn’t sign it and nor would any other small business.”
Mr Flett added: “We didn’t really understand what were getting in to – we assumed it would be good for us because the bank told us.
“We never dreamt we would be in this position, where it was costing us so much money.”
The bank have apologised and offered £347,871 in compensation.
The Financial Services Authority has said that 90% of interest-rate swap arrangements have been mis-sold.