Ceredigion MP Mark Williams, has seconded calls by a number of small business holders in Ceredigion for a proper redress scheme for small businesses who have allegedly been mis-sold financial products by banks, following a ‘Bully Banks’ conference in Westminster today.
The conference of small business holders from across the UK included attendees from Ceredigion – from those who run our hotels, pubs and farms - who have been under huge financial strain following this mis-selling scandal, labelled the next PPI scandal, and the failures of the Financial Conduct Authority’s redress scheme which has followed.
The voluntary redress scheme was implemented in June 2012, but since then a number of concerns from those affected have been raised, such as the fact that under the scheme it is the banks themselves that are determining levels redress, the transparency and consistency of the scheme, many customers just being offered one swap product for another, the inappropriate model used by the FCA for the scheme, the lack of redress to make up for any consequential losses incurred, and the exclusion of customers whose cases have been deemed too ‘sophisticated’ for the redress scheme or whose businesses have already folded. Mr Williams has contacted the Chancellor and the FCA to relay these concerns.
Commenting following the conference in Westminster, he said:
‘When the redress scheme was initially implemented I was very pleased, having spoken on this issue a number of times in Parliament on behalf of constituents. However we are hearing about more and more problems with the scheme and concerns about its appropriateness in providing adequate redress for small business holders. I hope, along with other MPs, to add pressure on the FCA and Government in order for these issues to be addressed soon.’
Mr Williams is also dealing with a number of constituents who run small businesses who took out tailored business loans (TBLs), which are fixed rate loans with hidden swaps. Because of a technicality, these particular loans are classed as ‘unregulated’ products by the Financial Conduct Authority and as such, do not fall within the parameters of the redress scheme at all.
These customers within Ceredigion have found themselves left with the fallout from these toxic loans - ever increasing margins and massive break charges, which were sometimes as much as 25% of the loan value. The financial problems associated with all of this is restricting their business growth and causing massive day to day anxiety, often pushing business owners to the brink in terms of bankruptcy.
Mr Williams said:
‘It is a complete nonsense that these products are not included in the FCA Review. The toxic effects are exactly the same as those standalone type hedge loans which are regulated by the FCA.
‘The Chief Executive of Clydesdale and Yorkshire Bank has now admitted as much in evidence to the Treasury Select Committee in June. If the boss of the bank admits that they were not properly explained and that customers didn’t know what they were getting themselves into, then that surely is evidence enough to include these products within the Financial Conduct Authority’s Review.
‘My constituents must have justice. It is appalling that they have already been left out in the cold without any recourse to proper redress for too long. I will continue this fight on their behalf so that the FCA includes these products within the Review. Nothing else is good enough.’
Whilst Clydesdale and Yorkshire Bank has always denied that its fixed-rate tailored business loans contain controversial swaps or derivative products, it is understood to be among the bigger sellers of the estimated 60,000 “hidden swap” loans which the Treasury committee is currently investigating.
The boss of Clydesdale Bank and Yorkshire Bank, David Thorburn, already admitted before the Treasury Select Committee earlier this year that selling complex loans to small businesses confused customers and that the accompanying literature “would not pass the plain English test”. The Bank’s Chief Executive also informed MPs, “Something did go wrong with some of these products. That’s a cause of great concern and regret to us,” and, “with hindsight it was clear we were selling them to customers who did not understand what they were getting into.”
Mr Williams is urging any small business owner in Ceredigion who thinks they may have been the victim of a swap mis-sale to contact him.