Banks ‘must own up’ to past small business customer mistakes

BANKS should accept responsibility for mis-selling scandals in order to rebuild trust with small businesses, Labour MP Toby Perkins has said.

HSBC has been criticised for its treatment of small businesses

Speaking to The Yorkshire Post, the shadow minister for small business said access to finance remained a major hurdle for independent firms.

While banks are working to address issues that led to mis-selling, they must acknowledge previous mistakes, Perkins said.

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He said: “The culture in banking that followed the deregulation of the banks in the 1980s, through to the ‘carpetbagging’ in the ‘90s when all the building societies disappeared, meant we had a very narrow banking sector.

“We had very little competition in a genuine way, and a culture in the banks that was all about short-term.

“Some of those cultural questions the banks are on the way to resolving. Part of that process of redemption is the banks owning up to what actually happened, and not making it difficult for people to get justice about wrongs in the past.”

Recent weeks have seen banks again come under fire for the treatment of small business customers.

In October, the Competition and Markets Authority (CMA) criticised HSBC and Northern Ireland’s First Trust Bank for telling small business customers they must open a current account to qualify for a business loan.

The CMA subsequently announced a full competition inquiry into the dominance of Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland (RBS) in small business banking services and personal current accounts.

Banks have set aside £1.5bn for compensation over mis-sold interest rate hedging products (IRHP), with further funds for case reviews. The scandal cost Yorkshire Bank £250m in the six months to September 30.Labour’s proposals for a regional bank network could “make a real difference” to small businesses by requiring institutions to lend to companies in their local area, he added.

Speaking at the launch of the Small Business Saturday national bus tour in Leeds, the Labour MP for Chesterfield said lowering business rates should be a government priority, as companies struggle with the disproportionate rise of high street taxes.

“We have the most expensive corporate property tax in the G20,” he said.

“We’re the cheapest place to bring your books, with a low level of profit tax but a very high level of business tax. It creates an economy that encourages businesses to bring their books here, but not their jobs, not their retail.”

A Labour government would cut and freeze business rates so a company valued under £50,000 would pay the same in 2017 as it did in 2012, he said.

Small businesses are essential to a strong economy, providing jobs and retail diversity, Perkins said.

“People are most likely to go from unemployed to employed through small businesses,” he said.

“The majority of employment is within small businesses, it’s the small businesses that go on to become large businesses - Marks & Spencers started here in Leeds as a small business.”

Perkins urged people to support initiatives like Small Business Saturday, which aims to promote small businesses and the products and services independent retailers provide.

He said: “The thing we can all do is just get out there and spend a bit of time every year to think, ‘am I shopping local?’

“It is easy when you’re rushed to go into big department stores but you get a more varied offer if you get off the beaten track.”

Small Business Saturday on tour

The Yorkshire Post is backing Small Business Saturday on December 6.

The initiative supports and promotes small businesses and aims to get people to explore the companies on their doorsteps in the run-up to Christmas.

Last year’s Small Business Saturday boosted independent traders by more than £500,000.

The Small Business Saturday bus tour started in Leeds and is heading to York before visiting another 11 locations before the big day. York was the first stop on last year’s inaugural tour.

National campaign director Michelle Ovens said: “Yorkshire is full of wonderful small businesses, so we’re really excited to come back again.”