Pressure rises on banks over interest rate swaps scandal
Monday 10 December 2012
Small businesses paying huge fees from interest rate swaps to their banks are set to meet the Financial Services Authority this week to call for a quicker and more transparent process.
The Federation of Small Businesses and the small business group Bully Banks will meet the FSA on Wednesday to discuss the issue which could affect up to 40,000 businesses.
Bully Banks, a consortium of SMEs that claim to have been mis-sold interest rate swap agreements, has said thousands of businesses are being pushed towards insolvency because of the delay in implementing the compensation scheme.
The FSA drew up a pilot scheme with banks nearly six months ago to offer redress to companies affected by the scandal.
Mike Cherry, national policy chairman at the Federation of Small Businesses (FSB), said: "The FSA has continued to ignore our calls to have this process overseen independently with full transparency. We are six months into the pilot and we have very little detail on what is happening. In the meantime businesses are still having to pay out while they wait."
Some of the swaps – sold with loans as insurance to hedge against rising interest rates – have already pushed businesses into administration.
The banks are obliged to review cases of the sales of these hedges to small and medium-sized businesses deemed "unsophisticated" by the FSA, but banks have argued that many of the businesses were fully aware of what they were agreeing to.
A legal case against Barclays brought by Guardian Care Homes for more than £12m over an alleged mis-sold interest-rate swap will now be heard in the high court.
Mr Cherrysaid: "Many businesses will have no choice but to take legal action, as in the case of Guardian Care Homes. This is something we have been trying to avoid."
As part of the pilot scheme a letter went out to businesses approved by the FSA, via the banks, at the end of last month explaining the scheme.
An FSA spokesman said: "The scheme has been tailored to ensure individual treatment for each business. We believe that this is likely to deliver the best outcome for businesses that bought these products. We are undertaking a rigorous review of the outcome of the pilot to ensure that banks and the independent reviewers are getting it right.
"We are also in close contact with Bully Banks and its members to ensure that they are kept updated about progress."
- 1 Notting Hill Carnival: Woman shares selfie after being ‘punched in face for telling man to stop groping her’
- 2 Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
- 3 Oil tanker with $100 million cargo goes missing off Texas coast
- 4 George Galloway left with severe bruising after attack in Notting Hill by man 'shouting about the Holocaust'
- 5 Medina: Saudis take a bulldozer to Islam's history
YouTube video posted by Isis militants shows 'execution of 250 Syrian soldiers'
Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
Oil tanker with $100 million cargo goes missing off Texas coast
George Galloway left with severe bruising after attack in Notting Hill by man 'shouting about the Holocaust'
Brother and sister, Christopher Buckner and Timothy Savoy, arrested for 'committing incest after watching 'The Notebook''
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
Ukip Douglas Carswell defection: Tory MP jumps ship to join Nigel Farage
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
- < Previous
- Next >
iJobs Money & Business
£50000 per annum: Harrington Starr: Financial Technical Consultant (C++, C#, F...
£50000 - £80000 per annum + benefits+bonus+package: Harrington Starr: Data Sci...
£450 - £500 per day: Orgtel: SAS Business Analyst, London, Banking, Credit Ris...
£32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...