BRITAIN’S biggest banks have so far paid out £482m from around £4bn they have set aside to compensate small firms mis-sold interest rate hedging products.
The Financial Conduct Authority (FCA) yesterday urged small business owners who believed they had been victims of mis-selling to join a compensation scheme. The FCA said that the banks’ offer to pay eight per cent annual interest on top of compensation was a “fair alternative” to them putting together claims for consequential losses. The products were designed to protect smaller companies against rising interest rates but, when rates fell, they had to pay large bills, typically running into tens of thousands of pounds. Companies also faced penalties to get out of the deals, which many said they had not been told about.
Today, a conference is due to be held by a group which represents firms who claim to have been mis-sold embedded swaps by Yorkshire and Clydesdale Banks.
The NAB Customer Support Group Conference is being held in Aberdeen, where the speakers are due to include the Liberal Democrat MP John Thurso who sponsored an early day motion last year which called on the Government to establish “proper regulation” of complex financial products,
A statement on the NAB Customer Support Group website said: “NAB Customer Support Group was set up by a small group of SMEs whose businesses have been crippled by long-term fixed rates adopted through Clydesdale Bank and Yorkshire Bank’s tailored business loans containing embedded interest rate swaps. Our membership is growing daily.”
A Yorkshire Bank spokesman said: “Fixed rate tailored business loans remain outside the scope of the review, however, any customer that is concerned about the sale of one of these can still use our normal complaints process. We remain fully committed to open and constructive dialogue with our customers.”
The Treasury Committee is preparing to summon the banks to give evidence in connection with its inquiry into SME lending.