Small businesses last night declared the Financial Services Authority's response to the mis-selling of interest rate hedging products did not go far enough and called for firms to be allowed to suspend their repayments.
Many have been forced to the wall by the massive bills being run up by products sold by RBS, Barclays, Lloyds and HSBC, marketed as prudent insurance against Bank of England interest rate rises. In fact, they were just gambles, which ran up huge penalties when interest rates fell, which they did to record lows. Some firms have been facing bills running into tens of thousands of pounds as a result.
The Federation of Small Businesses' national chairman, John Walker, declared: "Suspending repayments immediately would relieve and possibly rescue small firms that have been burdened with huge bills – in most cases for years – and who in some cases are close to bankruptcy."
Waheeda Bashir, a butcher from Ilford, Essex, said she faced bills of £8,000 a month. "We became beggars to make up the payments," she said, adding that she had been forced to sell her late grandmother's gold to make up the payments. Barclays is contesting her legal action claims.
The FSA is making the banks repay customers who bought the most complex products and ordered them to stop selling the products to retail customers. The mis-selling was encouraged by "rewards and incentives" for the bankers involved. The hedges were tied into loans, but in some cases did not even match the duration or amount being borrowed. Salesmen often did not check customers understood what they were buying.Reuse content