Banks are being put under pressure to speed up compensating a number of businesses in Stockport thought to be struggling as a result of being mis-sold interest rate protection products.
The scandal emerged in the summer, when the Financial Services Authority (FSA) revealed “serious failings” in the way these policies had been marketed to over 40,000 small and medium-sized companies around the country.
Eleven high street banks, including Barclays, Lloyds Banking Group, HSBC, the Royal Bank of Scotland, the Co-Operative Bank, Santander UK, and the Yorkshire and Clydesdale banks have agreed to compensate firms which were the victims of mis-selling. Several other smaller lenders have joined the FSA compensation scheme, but there is concern that the process is taking too long.
Guto Bebb, the Conservative MP who is leading the Parliamentary campaign to get redress for business, has warned that some lenders are dragging their feet, delaying the ability of other banks to launch the pilot scheme. He has also written to the FSA to point out that, “We should not allow a position to develop where the banks can only move forward at a pace dictated by the most intransigent institutions.”
Daniel Fallows, a director at Haydock-based Seneca Banking Consultants, which is handling a number of claims for businesses in Stockport, said: “Small businesses were sold products by banks they thought they could trust which in fact have proved damaging. The owners have been left straddled with high interest rates for loans and a great deal of personal anxiety and stress.”
“The businesses taking out these products included restaurants, retailers, property firms and manufacturers. The products were often presented to them as a simple insurance against rising interest rates, when in fact these hedging products are highly complex financial derivatives. Many victims were not made aware of the nature of what the bank had involved them in – or the very significant costs attached to exiting the product. In some cases, this has caused businesses to fail.”
He said one of the complications for any business owner wanting to go public with just how damaging these schemes had proved is the fear of what would happen if their dispute with their bank became public knowledge, which can cause uncertainly with suppliers and customers. “Directors can also be reluctant to talk about it because they feel they have been duped by the bank into accepting what was in reality an inappropriate product sold by a highly incentivised individual,” added Daniel Fallows. “It’s important to check your finances and take specialist advice if you think you were sold one of these interest-protection products.”