Small firms should not rely on the Financial Services Authority (FSA) when seeking redress for mis-sold interest rate swap agreements (IRSA), a campaigning group has said.
Jeremy Roe, chairman of Bully Banks, which represents more than 2,000 SMEs who were mis-sold IRSAs, told a conference in Glasgow that small businesses should pursue protective legal action against their bank themselves and put no faith in the FSA, The Herald Scotland reported.
The group is now launching a £150,000 fighting fund due to concerns that the review currently being led by the banks is designed to significantly limit the customer redress on offer, despite the recent FSA pilot confirming that over 90% of interest rate swap agreements (IRSA) could have been mis-sold.
"We are still planning on the basis that the banks will continue to be unresponsive and intransigent, as that is what they have been over the past five to seven years, and on the basis that the regulator will let us down," said Roe.
He added that it was a "disgrace and a scandal" that, seven months after the FSA first admitted that IRSAs has been mis-sold, it is still unclear what redress means.
"It could mean that if you were sold a swap over 20 years they will say that is mis-selling, you should have been sold a swap over five years. I am scared that is what is going to come out of this."
Roe said that it was understood that banks are defending claims by stating that SMEs "probably would have bought an interest rate hedge" anyway, adding that the risk of huge breakage fees made IRSAs "a product wholly unsuitable" for small firms.
"Most of us could have had our needs sorted with a 'cap', at a modest cost spread over the borrowing – but it produced no remuneration for the bank," he remarked.
"The banks' conduct across the whole saga by and large has been quite appalling, any good coming out now is a very new leaf being turned."
Meanwhile, it has been reported that six more banks - Allied Irish Bank (UK), Bank of Ireland, Clydesdale and Yorkshire Banks, The Co-operative Bank and Santander UK – have agreed to fully review whether any of their swap products were mis-sold.
Source: http://www.businesszone.co.uk/topic/finances/fsa-will-let-small-firms-down-over-interest-rate-swaps-redress/48055
Jeremy Roe, chairman of Bully Banks, which represents more than 2,000 SMEs who were mis-sold IRSAs, told a conference in Glasgow that small businesses should pursue protective legal action against their bank themselves and put no faith in the FSA, The Herald Scotland reported.
The group is now launching a £150,000 fighting fund due to concerns that the review currently being led by the banks is designed to significantly limit the customer redress on offer, despite the recent FSA pilot confirming that over 90% of interest rate swap agreements (IRSA) could have been mis-sold.
"We are still planning on the basis that the banks will continue to be unresponsive and intransigent, as that is what they have been over the past five to seven years, and on the basis that the regulator will let us down," said Roe.
He added that it was a "disgrace and a scandal" that, seven months after the FSA first admitted that IRSAs has been mis-sold, it is still unclear what redress means.
"It could mean that if you were sold a swap over 20 years they will say that is mis-selling, you should have been sold a swap over five years. I am scared that is what is going to come out of this."
Roe said that it was understood that banks are defending claims by stating that SMEs "probably would have bought an interest rate hedge" anyway, adding that the risk of huge breakage fees made IRSAs "a product wholly unsuitable" for small firms.
"Most of us could have had our needs sorted with a 'cap', at a modest cost spread over the borrowing – but it produced no remuneration for the bank," he remarked.
"The banks' conduct across the whole saga by and large has been quite appalling, any good coming out now is a very new leaf being turned."
Meanwhile, it has been reported that six more banks - Allied Irish Bank (UK), Bank of Ireland, Clydesdale and Yorkshire Banks, The Co-operative Bank and Santander UK – have agreed to fully review whether any of their swap products were mis-sold.
Source: http://www.businesszone.co.uk/topic/finances/fsa-will-let-small-firms-down-over-interest-rate-swaps-redress/48055
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