Agricultural Services

Agricultural Services

Our team of lawyers and former agricultural bank managers deal with a wide range of issues including: compensation claims for the mis-selling of financial products by banks and financial institutions, challenging and negotiating preferential business banking terms on behalf of farming clients and restructuring and refinancing.

We Can Help With

  • Farm sales and purchases
  • Tenancy agreements
  • Disposal of land for development
  • Overage agreements
  • Easements
  • Wayleave agreements
  • Grazing licences
  • Telecommunications and energy projects
  • Partnership agreements
  • Wills and probate
  • Inheritance tax planning
  • Family disputes

Fixed Rate Loan Case Studies

We are acting on behalf of farmers (and many other business owners) who have taken out a fixed rate loan.

As specialists in all types of banking dispute claims, we act on behalf of those clients who wish to make a complaint against their bank.

We cover all types of claims but notably claims for damages arising from fixed rate loans and amended loan terms. We have run, and continue to do so, cases against Clydesdale bank, RBS, Lloyds, AMC and several others.

We have a proven track record of success in this area and have successfully negotiated the return of break costs on fixed rate loans, the cancellation of break costs and reimbursement of interest on behalf of our farming clients.

Case Study 1

Farmer entered into a fixed rate loan with Clydesdale Bank in April 2008 for an amount of £570,000. The loan restructured existing debt held previously with another bank. The farmer had always borrowed on a variable rate basis, but Clydesdale persuaded him that the provision of known monthly payments was a key advantage. The loan became fixed in April 2008 for 20 years, at a rate of 5.37%.

In October 2011, faced with paying interest at 5.37% plus margin, whilst Base Rate stood at 0.50%, the farmer asked the bank if he could transfer to a variable rate basis. The bank said he could, but the break cost would be £137,000. Faced with those charges, the farmer had little choice but to remain on the fixed rate basis.

In May last year, we sent a letter of complaint to the bank on the farmer’s behalf challenging the validity of the break cost. In September, the bank partially upheld the complaint, deciding that the fixed rate term of 20 years had been too long. They instead retroactively shortened the fixed rate term. The redress offered provided the farmer with cash back of £43,000, and the loan is now on a variable rate basis of 0.50% rather than 5.37% for the remaining term of 13 years. The potential break cost is removed, allowing the farmer to re-bank if necessary.

Case Study 2

Farmer previously had a fixed rate loan with the Clydesdale Bank which was taken in March 2009 at a fixed rate of 3.67% for 10 years. Faced with paying high fixed rates the farmer moved to a different bank in September 2012, and by so doing paid a break cost of £81,000 cash. Despite having paid the break cost to the bank in 2012, the farmer wanted to pursue its repayment. We entered a claim of the farmer’s behalf, and the bank recently repaid the £81,000 plus interest thereon at 8%.

Case Study 3

Farmer agreed a fixed rate loan over 5 years denominated in the € currency. The amount was €470,000 and it was to be repaid using the Single Farm Payment. The bank assured the farmer that he faced no exchange risk. In the event, the bank structured the loan incorrectly, so at maturity the farmer still owed €74,000 which he did not have. The bank took the amount from his £ account causing an unauthorized overdraft. The bank also set up 2 € accounts and would convert € SFPs into £, and then back again creating a loss to the farmer each time, costing approximately £7,000 each year. Additionally when the annual payment date of the SFP moved to February from December, the bank continued to take loan repayments in December, causing an unauthorized overdraft and hefty charges. We raised a complaint to the bank in June last year, and entered a claim for £105,000 on behalf of the farmer, citing unexplained foreign exchange exposure and losses.

Case Study 4

Farmer had a loan facility with the bank for an amount of £420,000 which was to be repaid over 5 years from SFPs which would be taken in £. At inception the farmer told the bank that the amount was not enough for his needs given outflows of cash. The bank informed him that given the security held (estimated £2m) they would increase the facility if needed. The loan amount was periodically exceeded but the bank then refused to increase it, and the farmer’s loan margin was increased by the bank from 1.50% to 4.00%, and then 6.00% as a result. The bank said the increases were needed because its own costs had risen. The bank threatened to reduce the working overdraft. A complaint was raised under which it was pointed out that the bank had agreed not to remove loan facilities during a complaint process. The bank agreed to reduce the margin retroactively back to 4.00% and refund the difference. We have cited breach of contractual terms and have since taken the case on the farmer’s behalf to the Financial Ombudsman Service.

Case Study 5

Farmer had a £230,000 fixed rate loan with the bank dating from 2006, and when he had a need to borrow additional funds in 2010, the bank embedded some break cost, and put him on a larger fixed rate loan for £320,000 for an extended term of 8 years. Recently the farmer felt the banking relationship had broken down, and wished to move to another bank. A break cost of £28,000 prevented him from doing this. The farmer felt betrayed with the bank and bitter that the first break cost was embedded, and that the renegotiated term left him with an even higher (unfathomable) cost of exit.

We entered a direct complaint on his behalf. The bank offered to resolve the complaint by placing the loan on a variable rate basis from the beginning of 2015 onwards. This meant a small cash refund for the farmer (£8900), and a rebate of interest on interest paid. The break cost of £28,000 is now cancelled allowing the farmer to re-bank, or keep the loan on what are now decent terms.

Philip Ashley

Philip Ashley

Penrith

01768 868989

Email me
Beth Bamber

Beth Bamber

Carlisle

01228 593939

Email me
Tony Butterworth

Tony Butterworth

Carlisle Penrith

01228 593939
01768 868989

Email me
John Cook

John Cook

Carlisle Gateshead

01228 593939
0191 482 7456

Email me
Verity Mutch

Verity Mutch

Penrith

Email me
Chris Waugh

Chris Waugh

Penrith

01768 868989

Email me

Contacting Butterworths was the best thing I did. Without the help of Tony and his team we would have been sunk.

Dougie Graves