Pressure rises on banks over interest rate swaps scandal
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."
Chiwetel Ejiofor and Idris Elba get nods for Best Actor, which no black Brit has ever won
Geoffrey Macnab reviews The Desolation of Smaug - the meat in Peter Jackson's Hobbit sandwich
voicesJust when you thought you could find a man, get married, and have a baby by the age of 35... it turns out you’re too late, says Grace Dent
Swedish stars ask fans for £195 pledges on crowd-funding website
Nelson Mandela memorial: ‘Bogus’ sign language interpreter made mockery of Barack Obama’s tribute in Soweto
French café starts charging extra to rude customers
Australia: Gay marriage law reversed by high court less than a week after first weddings
Church versus state: Scientology faces unholy war after court ruling
Australia incest case: Severely deformed children found in remote farming community after generations of inbreeding
- 1 Nelson Mandela memorial: ‘Bogus’ sign language interpreter made mockery of Barack Obama’s tribute in Soweto
- 2 French café starts charging extra to rude customers
- 3 Australia: Gay marriage law reversed by high court less than a week after first weddings
- 4 Not all right on the night
- 5 Australia incest case: Severely deformed children found in remote farming community after generations of inbreeding
- < Previous
- Next >
iJobs Money & Business
£60000 - £100000 per annum + benefits + bonus: Harrington Starr: Senior Busine...
£500 - £550 per day: Cornwallis Elt : Business Systems, Business Analyst, Plat...
£90000 - £110000 per annum: Cornwallis Elt : Solution Architect, Credit Risk, ...
£44999 - £60001 per annum + Benefits: Pro-Recruitment Group: A Top Tier firm i...